2006 Annual Report.pdf - Seylan Bank

Growing Relationships
Annual Report 2006

Content
Seylan Bank - Vision & Mission 1
Financial Highlights & Financial Calendar 2006 2
Summary of Performance Indicators 3
Management Report
Chairman’s Statement 6 - 8
General Manager’s Review 9 - 15
Risk Management 16 - 17
Product Portfolio and Marketing 18 - 21
Corporate & Foreign Currency Banking 22 - 23
Sharebroking and Leasing 23
Development Banking 24 - 25
Small and Medium Enterprise Unit 25
Agricultural Banking 26
Grameen Banking 26
Private Banking 27
Operations & Business Process - Re-engineering 27
Information Technology 28 - 29
Treasury & International Operations 30
Board of Directors 32 - 35
Senior Management 36 - 37
Corporate Governance 38 - 39
Investors’ Information 40 - 43
Social Contribution
Our Human Capital 46 - 47
Corporate Social Responsibility 48 - 49
Financial Report
Report of the Directors 52 - 54
Director’s Responsibility for Financial Reporting 55
Audit Committee Report 56
Auditors’ Report 57
Income Statement 58
Balance Sheet 59
Statement of Changes in Equity 60
Cash Flow Statement 61
Notes to the Accounts 62 - 107
Geographical Analysis 108
Value Added Statement 109
Branch Network 110 - 113
Country Profile & Economic Indicators 114 - 115
Highlights of the year 116 - 117
History and Milestones 118 - 119
Ten Year Summary 120
Nostro Accounts 121
Glossary 122
Notice of Meeting 123
Corporate Information
Inner back cover
Vision
Be the most Caring & Trusted Bank
Mission
Be the Best Bank in Customer Service

Financial Highlights
During the year
(LKR’000)
Bank
Group
2006 2005 % change 2006 2005 % change
Income 17,183,481 13,090,715 31.26 18,684,144 14,373,553 29.99
Net Profit Before Income Tax 1,606,882 1,061,033 51.45 1,663,948 1,213,997 37.06
Income Tax on Profits 744,721 373,200 99.55 756,723 393,291 92.41
Net Profit After Taxation and Minority Interest 862,161 687,833 25.34 848,744 777,339 9.19
Revenue to Government 1,213,728 679,407 78.65 1,230,470 702,138 75.25
Gross Dividend (Note 1) 254,538 337,196 (24.51) 254,538 337,196 ( 24.51)
At the Year End
Shareholders' Funds 6,353,873 4,626,279 37.34 7,468,113 5,731,874 30.29
Retained Profit 2,656,500 1,914,643 38.75 3,135,694 2,301,229 36.26
Deposit from Customers 100,078,809 85,833,954 16.60 100,078,809 85,833,954 16.60
Loans & Advances 83,901,504 72,769,873 15.30 85,038,415 73,657,880 15.45
Total Assets 130,306,108 113,608,444 14.70 140,458,883 125,090,173 12.29
Information per Ordinary Share
Earnings (LKR) 6.49 8.20 (20.85) 6.39 9.27 (31.04)
Dividends (LKR) (Note 1) 1.50 2.00 (25.00) 1.50 2.00 (25.00)
Net Asset Value (LKR) 37.82 55.36 (31.69) 44.48 68.60 (35.15)
Market Value (LKR) - Voting Shares 35.00 36.75 (4.76) - - -
- Non Voting Shares 9.75 16.25 (40.00) - - -
Statutory/Other Ratios (%)
Core Capital 7.01 6.26 11.98 8.44 7.83 7.79
Total Capital 9.89 8.11 21.95 11.70 10.27 13.92
Liquidity 21.59 20.58 4.91 - - -
Price Earnings Ratio - Voting (times) 5.39 4.48 20.33 - - -
Dividend Cover (times) 3.39 2.04 66.18 - - -
Capital Funds to Liabilities & Contigent Liabilities 4.33 3.51 23.36 - - -
Note 1: Dividends for year 2006 are accounted for as per the accounting standard SLAS 12 Revised.
Financial Calendar 2006
1. UNAUDITED QUARTERLY FINANCIAL STATEMENTS :
1.1 1st Quarter - 31st MARCH 2006
• Issued to Colombo Stock Exchange - 27th April 2006
• Published in newspapers - 30th April 2006
2. AUDITED ACCOUNTS AND ANNUAL REPORT -
YEAR ENDED 31ST DECEMBER 2006
• Issued to the Colombo Stock Exchange - June 2007
• Circulated to Shareholders & Debenture holders -
June 2007
SEYLAN BANK - Annual Report 2006
1.2 2nd Quarter - 30th JUNE 2006
• Issued to Colombo Stock Exchange - 10th August 2006
• Published in newspapers - 14th August 2006
1.3 3rd Quarter - 30th SEPTEMBER 2006
• Issued to Colombo Stock Exchange - 2nd November 2006
• Published in newspapers - 07th November 2006
1.4 4th Quarter - 31ST DECEMBER 2006
• Issued to Colombo Stock Exchange - 26th February 2007
• Published in newspapers - 28th February 2007
3. 20th ANNUAL GENERAL MEETING - 26th June 2007
4. PREFERENCE DIVIDEND PAYABLE -
YEAR ENDED 31ST DECEMBER 2006 - 26th June 2007
5. FIRST & FINAL (ORDINARY) DIVIDEND PAYABLE -
YEAR ENDED 31st DECEMBER 2006 - 3rd July 2007
2

Summary of Performance Indicators
Measure 2006 2005 2004 2003 2002
SIZE
Assets Growth % 14.70 28.83 10.16 18.11 12.40
Contingent/(Total Assets+Contingent) % 12.29 14.36 19.22 18.14 16.31
Interest Earning Assets/Total Assets % 86.06 84.27 81.70 81.51 79.67
Cash & Reserves/Total Assets % 7.59 7.89 8.97 7.52 9.13
Risk Weighted Assets Growth % 19.04 22.22 12.62 30.27 12.69
PROFITABILITY
Return on Average Assets % 0.71 0.68 0.49 0.80 1.04
Return on Average Equity % 15.80 15.76 9.65 18.30 26.27
Net Profit/(Total Assets + Contingencies) % 0.56 0.52 0.37 0.60 0.82
Net Interest Margin (NII/Avg Int Earn. Assets) % 5.90 6.28 5.70 6.05 6.19
Net Interest Income/Total Income % 35.67 40.22 38.88 36.20 35.06
Cost to Income Ratio % 59.08 56.76 62.01 59.12 68.65
Average Interest Yield % 13.56 12.56 11.37 12.82 14.90
Average Interest Cost % 7.54 6.07 5.45 6.37 7.98
Interest Rate Spread % 6.02 6.50 5.93 6.45 6.92
Int Yield on Customer Adv. % 14.55 13.50 12.28 13.83 15.99
Int Cost on Customer Deposits % 7.07 5.78 5.04 6.10 7.85
Spread on Customer Deposits & Advances % 7.48 7.72 7.24 7.73 8.14
Profit Handout (Note 1) % 29.52 49.02 32.72 20.46 10.63
Growth Rate of Equity % 37.34 12.72 (5.98) 53.33 27.21
Earnings per Share LKR 6.49 8.20 4.85 10.40 15.20
Dividends per Share (Note 1) LKR 1.50 2.00 1.60 1.50 1.50
ASSET QUALITY
Loss Provisions LKR Mn. 4,558.57 4,266.81 4,430.70 3,008.75 1,606.67
Provision Recoveries LKR Mn. 873.84 599.95 195.46 76.19 24.06
Provisions/Loans+Bills+Leases % 4.53 4.85 6.36 5.28 3.32
NPL with Interest in Suspense LKR Mn. 13,950.66 13,501.64 13,059.00 11,611.40 10,025.09
NPL with Interest in Suspense/Gross Loans % 13.88 15.34 18.74 20.39 20.72
Interest In Suspense on Advances LKR Mn. 2,724.67 2,290.63 2,439.11 2,293.28 2,352.81
NPL excluding IIS LKR Mn. 11,225.99 11,211.00 10,619.89 9,318.12 7,672.28
NPL excluding IIS/Gross Loans % 11.17 12.74 15.24 16.36 15.86
Int In Suspense/Gross Loans % 2.71 2.60 3.50 4.03 4.86
Net Assets Value per Share LKR 37.82 55.36 49.12 52.24 65.36
CAPITAL ADEQUECY
Leverage on Share Capital Times 19.51 23.56 20.49 17.34 22.81
Leverage on Capital Funds (Including Debentures) Times 10.70 12.31 11.04 9.53 12.10
Percentage Earnings Retained (Note 1) % 70.48 50.98 67.28 79.54 89.37
Equity/Deposits & Borrowings % 5.83 4.87 5.72 6.74 5.04
Equity/Total Assets % 4.85 4.07 4.65 5.45 4.20
Equity/Loans+Bills+Leases % 6.78 5.68 6.53 8.45 6.41
LIQUIDITY & FUNDING
Loans+Bills+Leases/Deposits & Borrowings % 85.98 85.79 87.59 79.79 78.69
Customer Deposits/(Deposits,Borrowings & Debentures) % 88.37 86.81 91.13 87.34 89.19
Liquid Assets/Total Assets % 22.08 20.40 19.68 23.97 25.74
Liquid Assets/Deposits & Borrowings % 26.52 24.40 24.19 29.64 30.90
Net Lending or (Borrowings) in Call Money Market LKR Mn. (2,537.97) (3,320.61) (858.51) (2,233) (1,827)
OTHER DATA
Number of Banking Centres 116 116 112 109 96
Number of Staff Members 3,934 3,700 3,280 3,250 3,316
Profits per Average Staff LKR '000 219 186 117 182 201
Number of Ordinary Shares - Voting 000 43,560 43,560 43,560 43,560 43,560
- Non Voting 000 123,560 40,000 40,000 40,000 -
Share Prices as at 31st December - Voting LKR 35.00 36.75 30.00 47.00 52.00
- Non Voting LKR 9.75 16.25 16.50 20.25 -
Note 1: Dividends for the year 2006 are accounted for as per the accounting standard SLAS 12 Revised.
SEYLAN BANK - Annual Report 2006
3

Nurturing Growth
Management Reports

Chairman’s Statement
SEYLAN BANK - Annual Report 2006
Dear Shareholder,
I welcome you to the twentieth Annual General Meeting of
Seylan Bank Ltd and present you the Annual Report for the
financial year ended 31 December 2006. During the last
twenty years’ of challenges and spectacular life span, the
Bank with a heart has grown by leaps and bounds reaching
all segments of the Sri Lankan society. The Bank also
pioneered many specialised services to the nation, truly as an
indigenous bank for the Sri Lankan entrepreneur.
Global Economic Prospects
The strong performance of developing countries in the recent
years posed a question whether these higher rates of growth
could be sustained in the long term while globalisation is
reaching a new phase. The next wave of globalisation is
termed with three main features. Basically, in international
economy, developing countries will achieve a bigger share of
the economic growth, with the emergence of new trading
powerhouses such as China, India and Brazil. The domain of
the traditional economic powers such as USA, Europe and
Japan are being challenged. Secondly, the potential for
increased productivity offered by global production chains,
particularly in services, which opens up many avenues for
developing countries. Finally the accelerated development of
technology, made possible through cheaper and efficient
communications and improved access to new markets has
seen a rise in global growth. The next move of globalisation
characteristic with deeper integration of the world economy
through trade, flows of information technology, finance and
migration will offer renewed and enhanced opportunities to
increase productivity and raise incomes. Producers
participating in bigger international markets will be able to
produce on a larger scale, access the most appropriate
technology and knowhow and participate in increasingly
integrated global production chains. Consumers everywhere
will have access to the latest international products.
Despite high commodity prices, rising short-term interest
rates and financial market volatility, global growth
accelerated in the first half of 2006 and developing
economies are projected to expand by 7 percent for the year
as a whole, more than twice as fast as high income countries.
World GDP is projected to grow by 3.2% and 3.5% in 2007
and 2008 while South Asian economies are projected to
expand at 7.5% and 7.0% respectively. East Asia will
continue to lead the growth momentum at 8.7% and 8.1% in
2007 and 2008. World trade volumes are also estimated to
grow in the region of 7% to 8 % during the next two years.
Commodity prices are projecting a decline mainly due to an
anticipated reduction in oil price and a decline in interest
rates in the USA.
Sri Lankan Economy
Despite the intensification of violence in the North & East, the
somewhat unstable political situation in the country and the
increasing oil price in the international market, the growth
momentum in the economy continued showing resilience.
The Agricultural Sector was augmented by increased
production of Tea, Rubber and Coconut strongly and
Garments industry continued to contribute to the improved
output of the Industrial Sector. The Services Sector too
recorded a commendable achievement with a rapid
6

Chairman’s Statement
SEYLAN BANK - Annual Report 2006
7

Chairman’s Statement
expansion in telecommunications, cargo handling, financial
services and trade. In the light of this progress, the
Sri Lankan economy should reach an overall growth of 7%
plus for year 2007.
How we fared this year
I wish to announce with pride that Seylan Bank has made the
highest ever after tax profit for the year 2006 posting a
commendable Rs. 862 Mn. The Bank’s interest income rose
by 33.99% and the profit before tax and vat increased by
51.83% over the previous year. It is with pride that we note
that the Bank has posted a pre-tax profitability of Rs. 1,607
Mn. During the year.
We also reached the milestone of the 100 Bln mark in
deposits, which is a clear reflection of customer confidence
placed in the Bank.
I must pay tribute to the CEO Ajitha Pasqual for leading his
team to achieve this milestone in an unfavourable
atmosphere in the whole financial sector.
Our challenges ahead
The biggest challenge ahead of all the banks, in the near
future is the new capital requirements imposed by the
authorities and the high taxation. In addition, preparation for
BASEL II in 2008 and the high interest rates and inflation will
continue to be the major challenges to overcome.
Prospects for 2007
If the long dragged war situation in the north and east settles
in the near future the prospects of the economy will be high
and bright in all aspects. Judging by the performance we
have displayed this year the Bank could bounce back with a
greater performance in the coming year, if peace prevails.
My vision to take Seylan as far as possible to reach the
poverty ridden people in this country remains as strong as
ever and I believe that to develop this country, the
contribution from all strata irrespective of their standing
should come forth. Our prime goal is to build a life long
relationship with our customers, by catering to their overall
needs.
This year we have come out with the most innovative money
transfer method under the flagship product, “Ceylinco Fast
Cash”. Plans are to capture a substantial market share in the
foreign remittances business. This unique product will not
only target the remittances, but will be a total “lifestyle”
product aimed at uplifting the lifestyle of the remitters and
their families.
The excellent performance of the Bank this year, signifies the
strength of my team who work in absolute harmony devoid
of any communal, racial or religious differences. We are
confident that we can continue on the same ideals as those
of the past and bring in the desired results for the benefit of
all our stakeholders.
Deshamanya Dr Lalith Kotelawala
Chairman/Managing Director
Colombo
16th May 2007
SEYLAN BANK - Annual Report 2006
8

General Manager’s Review
SEYLAN BANK - Annual Report 2006
9

General Manager’s Review
LKR Mn.
2400
Net Profit Before Tax
and After Tax
ROE%
29
Return on Average Assets
& Equity
ROAA%
1.1
LKRMn.
17000
Turnover
2100
25
0.9
15500
1800
1500
21
0.7
14000
1200
17
0.5
12500
900
13
0.3
11000
600
300
9
0.1
9500
0
5
0.0
8000
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
Net profit before Vat & corp. tax
Net profit after Vat & corp. tax
ROE
ROAA
SEYLAN BANK - Annual Report 2006
The year has been a challenging one but nonetheless
one that has shown that Sri Lanka is once again resilient.
The Bank too, despite tightening controls, a high and
fluctuating interest rate regime and increased
competition, performed significantly well due to a
planned judicious decision making process that has
constantly perceived the medium to long term
ramifications, rather than the more immediate shorter
term. I am indeed very pleased that the Seylan Team has
always risen to the occasion and not considered any
problem insurmountable, conquering the challenges and
gaining ground even during times that the industry finds
it difficult to maintain the bottom line.
Overview of the economy
Despite high commodity prices, rising short-term interest
rates and a bout of financial market volatility, global
growth accelerated in the first half of 2006 and
developing economies were projected to expand by 7
per cent for the year as a whole with all developing
regions growing by more than 5 per cent. The fast
growth of developing countries over the past five years
has been fueled by low interest rates and abundant
global liquidity, which has led to rising commodity prices,
tightening of monetary policy due to overheating in some
high income and developing countries and is partly
responsible for the slowdown which has already begun.
Limited inflationary pressures and high savings among oil
exporters and in Europe are expected to keep long-term
interest rates low. Even though developing country
growth is projected to decrease over the next two years,
it is estimated however that growth will continue to
remain at a robust 6.1 per cent in 2008.
Sri Lanka ended up with a growth of 7.4 per cent this
year, having achieved a growth of 8 per cent in the first
half of 2006. This is extremely laudable as the country
faced several major challenges including high
international oil prices, a return to fighting in the North
and East and the threat of terrorism spilling over into the
commercial capital. However, all major contributory
sectors to the economy grew at a healthy pace. The
agriculture sector recorded an increase in all sub sectors
except in tea with record harvests posted in the Maha
season 2005/6. Benefiting from rapid global economic
growth and strong domestic demand, the industry sector
was also on an upward trend with hydropower
generation contributing substantially to this sector.
Telecommunication and port services, domestic and
international trade and financial services dominated
growth in the services sector.
However, inflation continues to be at an all time high,
rising to double digits due to increasing demand
10

General Manager’s Review
pressures in the economy. The point-to-point change in
the Colombo Consumer Price Index (CCPI) has increased
about 19 per cent on average in the last two months
with core inflation, which is a measure of inflation
directly caused by demand pressures also rising to 15
per cent by November 2006. These pressures were
aggravated due to the upward adjustments in
administered prices, increases in prices of some of the
imported consumer items and adjustments in import
tariffs applicable to some consumer food items. At the
same time, increased economic activity lowered
unemployment by 1 per cent, growing the labour force to
8.2 million this year.
Both savings and investment recorded upward trends
with domestic private savings increasing to about 19 per
cent of GDP and national savings also seeing an increase
due to a high growth in migrant worker remittances. The
investment to GDP ratio improved from 26.5 per cent to
29 per cent with private sector investment accounting
for about 87 per cent of total investment. Public sector
investment was also augmented with increased activity
in infrastructure and community development efforts as
well as tsunami related reconstruction and rehabilitation
projects.
the IMF and the IFC require a minimum of 1 percent
return on assets which all delves into our bottom line
figures and profitability, which therefore will have an
impact on our bottom line.
The Group turnover increased by 29.9 percent, with our
advances portfolio increasing by 14.4 percent due to a
concerted effort deployed in growing our deposit base.
Growth in other income increased by 19.9 percent over
last year’s Rs .2,742 Mn. to Rs.3,289 Mn. this year. The
return on average assets improved considerably to reach
0.71 percent as against 0.68 percent recorded in 2005.
Return on Capital Employed stands at 15.8 percent at
end 2005 while Earnings Per share stands at Rs.6.49 per
share.
Our recoveries have gathered exceptional momentum
during the year and proved to be very strong. Our net
NPL ratio currently stands at 11.17%, which is marginally
higher than the industry. While some bad debts had to
be provided due to drought ridden farmer loans affecting
the payback patterns amounting to approximately Rs 300
million, we are confident that the restructuring we have
worked on will bring in the desired recovery levels.
Expanding our presence
Overview of the Bank’s performance
The substantial growth posted by the Bank is indeed
impressive both in overall income and also on net
profitability. Profit before taxation stands at Rs.2,076 Mn.
an increase of 51.8 percent over last year’s Rs.1,367 Mn.
while net profit increased by 25.3 per cent, from Rs.687.8
Mn. in 2006 to Rs.862.2 Mn. this year. However the high
taxation regime continues to hamper us. The introduction
of the additional provisioning requirements of 0.1percent
of the performing portfolio being classified for
provisioning the Risk Asset weighting on/advances
increasing from 100 percent to 110 percent in end 2006
will also continue to hamper future progress and the
ability of the banks to plough more capital into the
banking business. Another danger we have perceived is
that funding lines available from funding agencies like
In an environment that poses to be increasingly
competitive, Seylan has always looked towards
innovative avenues of taking banking to the people. We
currently have a network of 115 offices encompassing 93
fully functional branches, 22 sub branches and 110 ATMs.
We had been restricted in earlier years regarding our
branch expansion and therefore introduced the novel
concept of mobile banking units which became an
extremely popular mode of banking especially in the
difficult areas of the country. We currently have thirty
mobile banking units that travel in a stipulated vicinity of
a mother branch and have been successful in mobilizing
deposits especially among the agricultural and plantation
areas. We have also added value to the services offered
by our mobile units, allowing the young students to avail
themselves of the multi media and internet facilities that
SEYLAN BANK - Annual Report 2006
11

General Manager’s Review
Cost to Income Ratio
Shareholder Value
Deposits & Advances
%
70
EPS LKR
16
Share Price LKR
60
LKRMn.
110,000
68
66
64
12
45
100,000
90,000
62
60
8
30
80,000
58
70,000
56
54
52
4
15
60,000
50,000
50
0
0
40,000
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
Cost to income ratio (%)
EPS
Share Price
Deposits
Advances
are housed within those units. We have plans of taking
this initiative further by establishing a Study Centre for
the children in Eppawela, running a solar powered centre
where they can develop and hone their talents and
knowledge in a safe environment.
We have been granted approval by the Central Bank of
Sri Lanka to establish 14 ATMs in 2008 which would
certainly augment our overall presence and we remain
optimistic on obtaining approval for additional branches.
added destination especially in the area of tea, gems and
other commodities and I believe this should be pursued
relentlessly to ensure that the country gets the best from
its resources.
We continue our leadership position of being the No 1
issuer of credit cards having issued around 550 thousand
VISA credit and debit cards from inception. In fact, our
debit card issuance stands at a laudable 450,000 and this
is an area that we feel has immense potential for growth
SEYLAN BANK - Annual Report 2006
We aim to concentrate on mobilizing deposits and
reducing non performing ratios aggressively and
mobilize deposits next year as we feel that lending will
take a more conservative back seat, as overall economic
growth could be limited, available new business
opportunities will be targeted by all Banks. Our focus will
continue to remain on retail customers although our
corporate customer portfolio will be increased prudently
in select areas. We see potential in certain export
sectors, especially in the value added garments and tea
sectors, where the growth momentum is expected to
continue. But we do urge industries to move into value
addition, as greater markets have, positives can be
derived only from venturing into this genre of exports
rather than being a predominantly raw material exporter.
There is immense potential in Sri Lanka becoming a value
and a focus area for the future. We also pioneered the
insurance of Visa Travelers Card.
Developing the entrepreneurial spark
In line with the Chairman’s vision of growing the Sri
Lankan entrepreneur, we are on a single minded focus of
identifying potential, harnessing talent and guiding
entrepreneurs to develop themselves thereby
contributing towards the rural economy. Most of our
initiatives this year have been in this niche segment
supported ably by the Grameen banking sector,
development banking and value added assistance like
housing, credit cards and insurance that would enable
this segment of customer to grow in a sustainable
manner. The housing segment of business has been
strengthened and developed considerably and
contributed significantly to our bottom line. Our initiative
12

General Manager’s Review
Other Income
Yield, Cost & Spread
Income vs Cost
LKRMn.
3500
%
18
LKR Mn.
9,500
3000
16
8,500
2500
2000
1500
1000
500
0
14
12
10
8
6
4
2
7,500
6,500
5,500
4,500
3,500
-500
0
2,500
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
Foreign exchange income
Fee & Commission income
Investment Income
Others
Average interest yield
Average interest cost
Spread
Operational expenses
Total net income
of deploying Business Development Officers on the field
to grow the SME sector has turned in good results. The
concentrated marketing efforts coupled with excellent
customer service and good payback patterns have
enabled us to grow the micro and SME segment of our
business considerably.
Building a service oriented team
Teamwork continues to be the passion that drives us
towards our goal of being the Best Bank in Customer
Service next year. We have concentrated heavily on
creating an empowering environment for our team
through a number of training and development initiatives
and recognizing and rewarding performance. About 200
of the team have embarked on overseas training thus far.
Staff retention continues to be a challenge as our well
trained staff continues to be the focus of the Middle East
where remuneration and benefits are quite attractive in
comparison to local remuneration packages. But this
again proves that our peers abroad consider our team as
I would also like to make special mention here of our
teams in the North and East, who have performed
admirably despite very trying circumstances, which
proves the loyalty and motivation inherent within our
team. Until the escalation of the fighting in those areas
last year, many of the branches in the north and east,
especially Vavuniya were excellent performers. The
momentum of growth sadly, cannot be continued due to
the present ground situation.
Beyond Sri Lanka
Our presence in the Maldives has gown significantly,
from conservative beginnings. Margins continue to
remain attractive and the cash flows remain robust,
while the track record has been very good. Working on a
syndicate with the likes of HSBC, HNB, Commercial Bank,
and some local banks including Bank of Maldives, we
have seen immense potential for growth in this market
and plan to expand our business portfolio in the Maldives
in the coming year.
one of the most knowledgeable and professional and is
one of the reasons that the team members are
earmarked.
We have implemented a number of initiatives that will
create the right environment for a contented and
productive team
Ceylinco Fast Cash was most probably the most
revolutionary remittance scheme to be introduced to
Sri Lanka and we are proud to be named as its banking
partner in Sri Lanka. Under the Chairman’s vision of
presenting a total package of financial solutions to the
Sri Lankan expatriate, mainly blue collar community,
SEYLAN BANK - Annual Report 2006
13

General Manager’s Review
Assets
Profit per Employee
LKRMn.
130,000
%
250
120,000
200
110,000
100,000
150
90,000
100
80,000
70,000
50
60,000
0
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
Profit per employee
Ceylinco Fast Cash truly lives up to its name. Currently
strong in the Middle East but with plans of expanding it
to Europe, USA and Asia with a strong Sri Lankan
presence, the product will be married to cross sell some
of the other products and services within the Group
including insurance and housing.
There is also an inbuilt social platform in our overseas
initiatives especially, in dealing with housemaids and blue
collar workers and that is that given the uncertainty that
prevails in the Middle East and adjacent countries, most
often workers are left stranded with no wherewithal or
avenue to return home. The Group has already
conducted one such social operation in bringing 308
stranded housemaids back to Sri Lanka from Lebanon
partnered ably by the Bank, an initiative that will be
continued if the need arises.
Compliance Initiatives
Seylan Bank has always believed in absolute
transparency and accountability in all our actions and
governance. Looking at the BASEL II regime due to be
benchmarks. The requirements of BASEL II have been
cascaded to all the branches as well and a regular check
is carried out to ensure that the implementation plan
remains on track.
Challenges and solutions in the coming year
We are very strongly on board with the Chairman’s vision
of being a Bank that not only targets profitability but
takes a long term vision of a Bank that seriously
addresses Corporate social Responsibility. We do believe
that poverty should not be tolerated and therefore it is
our responsibility that poverty alleviation must be
supported. Our initiatives therefore are all built on this
premise – whether in uplifting micro entrepreneurs or
the SME sector, in providing avenues for shelter through
housing and in creating a strong and robust foundation
for the
Sri Lankan expatriates who will have the security and
stability of having invested their hard earned money
sensibly and for tangible results.
With the interest rates, inflation and liquidity continuing
SEYLAN BANK - Annual Report 2006
implemented in 2008, which is aimed at minimizing and
curtailing risk, we have set up a special unit to
implement the necessary requirements. This year we also
established an independent Special Compliance Unit and
a Central Risk Management Unit headed by a former
Bank Supervisor to ensure that the Bank remains on
track and on target to achieving the stipulated
its upward trend next year too and no breakthrough at
the negotiating table among the warring factions, I do
believe that direct investments will be tough to attract.
This would significantly affect the country’s development
efforts and thereby have a cascading effect on all angles
of economic activity including a crunch on deposits.
However while we anticipate a tough year ahead, given
14

General Manager’s Review
the resilience of the past, Sri Lanka’s economy will
continue to grow albeit at a slower pace than expected.
at the top gives us added impetus to seek further
opportunities and overcome challenges.
We remain very confident about the next year, although
we do realize it will be a challenging one. However, if the
financial services sector is to reap the best results, it
requires pragmatic leadership and innovative initiatives
to be taken at the macro level aimed at permeating to
the micro level. It is this paradigm that will help sustain
and strengthen a strong bottom line for the entire
financial services sector in the country and give the
To our customers whose unswerving loyalty, makes us
continue our innovative stance to ensure that you grow
with us deserves sincere appreciation and to our valued
business associates, you are truly our partners in
achieving a common goal. Thank you also to our
shareholders whose confidence in us remains unshaken.
We are inspired by all our stakeholders and will continue
to move onto bigger and better things in the year ahead.
sector a dynamism and boost that is required to perform
at its best.
Appreciations
Each year brings with it a new set of challenges and this
year has been no different. But what is most rewarding
for me is that I have been given the guidance and holistic
leadership from the Chairman and the Board of Directors
whose unreserved support has helped me and the
Seylan Team face any challenge with courage. My
wholehearted thanks are also extended to my Team
Ajita M Pasqual
Director/General Manager/Chief Executive
Colombo
16th May 2007
whose dynamism and zest for continuing to keep Seylan
SEYLAN BANK - Annual Report 2006
15

Risk Management
MANAGEMENT OF RISK IN AN UNCERTAIN ENVIRONMENT
Risk is an essential ingredient in the banking business and
therefore, Management of Risk is crucial for success in the
financial services, sector.
Risk by definition is a probability of returns arising due to
uncertainty. Return could result in either gains or losses,
which can be predictable or unpredictable. Risk Management
involves identifying, qualifying and responding to risk through
the means and lessening the adverse results accompanied
with it. An effective and dedicated Risk Management
framework based on preset parameters would assist the
bank to mitigate risks in an environment where the return on
assets is relatively lower compared to other businesses due
to lower margins that the banks are enjoying.
or losses due to unexpected movements in the market
forces.
Hence, Seylan Bank has taken adequate steps to ensure
timely observation of market conditions frequently for the
purpose of enhancing its profitability and controlling the
risk in an appropriate manner.
Operational Risk
Operational Risk is the risk of financial measures arising
from the performance from the operational business
process and procedures and the internal controls. This
includes damages to reputation arising from breakdowns
in systems, disrupting the smooth functioning of the Bank
and deterioration of Customer Service.
SEYLAN BANK - Annual Report 2006
Seylan Bank as an organization always tries to maximize its
shareholder interest and Risk Management has been one of
the key managerial functions within the organization.
Major Risk Exposures
The Bank has recognized the following risk exposures as the
key areas to be addressed in the exercise of Risk
Management.
• Credit Risk
• Market Risk
• Operational Risk • Liquidity Risk
• Regulatory Compliance & Legal Risk
Credit Risk
Credit Risk is an integral element of the banking business
and a core strategic focus of our operations, since the
portfolio of loans and advances account for
approximately 71% of the total assets of the bank. Credit
risk takes diverse forms and includes Default Risk,
Security Risk, Cross Boarders Risk & Settlement Risk that
leads to the possibility of deterioration on the asset
quality.
Market Risk
The potential for fluctuations of market conditions such
as interest rates, exchange rates, stock prices,
competitors’ behaviour and other market factors that has
an impact on the price of financial instruments cause
losses in terms of Market Risk.
Since the major portion of the assets and liabilities are
subject to either fixed or variable interest rates and a
substantial percentage of assets are further denominated
in foreign currencies, the adverse movements in market
interest rates or foreign exchange rates may cause gains
Liquidity Risk
Liquidity Risk is the risk of being unable to generate
Funds to settle the financial obligations as and when they
arise. Managing Liquidity Risk includes managing and
matching of assets and liabilities according to their
maturity patterns and eliminating any foreseeable
mismatches.
Regulatory Compliance & Legal Risk
Banking business is one of the most regulated and
controlled businesses in the world. The Bank as a legal
entity, has to comply with various statutory and legal
requirements in the scope of its business. These include
the Central Bank guidelines, obligation of payment of
taxes and upholding the fundamental rights of employees
and lawsuits etc.
Risk Management Measures Adapted by Seylan Bank
Credit Risk
• Seylan Bank adopts a dual approach in ensuring the
soundness of its assets whilst assessing individual credit
proposals on a case-by-case basis. The bank also
assesses and monitors the advances portfolio as a whole
on a regular basis. Seylan Bank has gone a step further
by introducing a new credit rating system to evaluate
corporate and personal credit proposals at branch level.
• The Credit Policy Committee comprises members of
Senior Management and is responsible for reviewing
credit growth, controlling of excess limits, issuing
guidelines and managing NPL on a regular basis.
• The Bank has introduced a Collateral Recording Module
(CRM) for proper recording of collateral assigned on
credit facilities.
16

Risk Management
• The Movement Account Delinquency Module (MAD) has
been installed to identify delinquent overdrafts, classify
them properly and suspense interests at the proper time.
This module helps in recording recoveries of such
delinquent facilities and reports to the Credit Committee.
• The Basel II Committee is working on the strategies to be
adopted on Credit Risk standardized approaches that are
required to be implemented by January 2008. A special
IT Committee has been appointed to develop an in-house
software system to filter and extract data from the
system, for the purpose of complying with the
computation of minimum capital requirements.
• The Bank has taken one step ahead in investing in a
software for internal credit rating which will facilitate the
advanced approach / IRB approach of Basel II.
Market Risk
• Seylan Bank has taken adequate steps to ensure timely
observation of market conditions frequently for the
purpose of enhancing its profitability and controlling the
risks in an appropriate manner. The Asset and Liability
Committee (ALCO) Headed by The Director/General
Manager/Chief Executive meets once a month to monitor,
control and set guidelines in managing market risk while
the Treasury Committee meets daily to analyse market
conditions and make decisions to maximize profitability
over market risk. The Treasury Committee is headed by
The Director/General Manager/Chief Executive.
• The Treasury Committee chaired by the Director / General
Manager / Chief Executive daily monitors the advances
and deposit ratio, interest rate fluctuations and liquidity
position of the Bank. The treasury exposure limits, viz
dealer counter party transaction, product, currency and
broker limits are constantly reviewed and monitored for
better controls. The Treasury is equipped with dedicated
and sophisticated software and web trading platforms of
reputed international banks and a highly skilled and
trained staff. Seylan Bank ensures segregation of duties,
responsibilities and reporting structures between Front
Office and Back Office with a Middle Office monitoring
the approved limits.
Operational Risk
• The Bank believes in minimizing the Operational Risk
through well-trained and highly skilled staff and to
achieve this the bank has made a substantial investment
in staff training.
• Delegated authority levels and transaction authority limits
are well defined for better controls of the operational areas.
• The Operations Department sets guidelines and procedures
by way of circular instructions and monitor the day-to-day
operational functions.
• A new procedure has been introduced to accommodate
auditing under the IT based environment along with
Information Systems Audit functions separately for IT
audits.
• The Bank’s Audit Committee functions independently and
reports directly to the Board of Directors.
Liquidity Risk
• The ALCO is chaired by monitors who set guidelines for
the Management of Liquidity Risk, while the Treasury
Committee meets daily to monitor the liquidity position.
• The Bank has consciously controlled the growth of the
loan book in order to maintain a prudential liquidity ratio.
• The portfolio of liquid and tradeable assets such as
Government Treasury Bills and Bonds is maintained at the
optimum levels to meet any contingency.
• Adequate credit lines with local banks and foreign
correspondent banks are in place as a prudent measure.
Regulatory Compliance & Legal Risk
• The Central Bank guidelines and regulations are strictly
adhered to and the relevant reports are submitted on time.
• A financial Intelligence Unit has been set-up under the
supervision of a Director of the Bank to comply with the
legislations enacted in the parliament viz Money
Laundering Act No 5 and Financial Transactions Reporting
Act No 6 of 2006.
• The Bank monitors the thresholds for cash transactions
and electronic funds transfers (LKR 500,000/- and USD
5,000/- or its equivalent in any foreign currency) and
reports to the Financial Intelligence Unit functioning under
the Central Bank with the support of an internally
developed computer programme.
• The Bank reviews quarter, its strategies on all risk aspects
at a Management Conference and takes strategic
decisions to review the performance against the budgeted
targets.
• The Bank has taken adequate measures on storing
computer data back-ups for an emergency that may arise.
SEYLAN BANK - Annual Report 2006
17

Product Portfolio and Marketing
Being ‘The Bank with a Heart’ is what we continue to
espouse and we are always striving to meet that far reaching
promise, which should and to a great extent has, touched the
life of many a Sri Lankan, both here and abroad. Our brand
and products have been built on a social concept of being a
bank that is approachable and being a bank that cares.
People have come to expect Seylan to present solutions to
their financial needs and to be more than a bank in their
lives.
With nearly all our branches equipped with 98 ATM machines
and six offsite ATMs also added to increase efficiency,
customers can now avail themselves of a number of online
facilities and functions that would give them more flexibility
and more accessibility. We will be adding 15 stand alone
ATMs into our portfolio next year. The Bank has also
considerably reduced downtime in ATMs and delivery
channels have been enhanced, whilst IT will play a bigger
role in imparting a better service to our customers.
Having built a brand and image thus, it is imperative that
Seylan then continues to build upon its image already
founded. Each year, our brand and product development
strategies, coupled with integrated marketing campaigns,
work on initiatives that would add value to each of our
customer genres, from large corporates to the micro
entrepreneur in a far flung destitute village. Existing products
have been re-launched to be more effective and new
products launched to add more service angles, meeting
customer aspirations. Marketing is not simply confined to
regular multi-media channels but has become a more
personalised effort where even home visits and relationship
building has been brought under the broad umbrella of ‘sales
in marketing’.
The Internet banking platform has also been enhanced with a
number of functions including payment of utility bills, credit
card bills transfers to third party banks all being included in
the menu of services through eSeypurse, Seylan’s Internet
payment gateway. In addition, the unique concept of online
shopping, a concept introduced by Seylan to Sri Lanka, an
innovative window of opportunity is opened for small and
medium scale entrepreneurs as well as internationally
recognised regular merchants to develop and market
products through the Internet.
Seylan Bank has taken the concept of banking to some of the
remotest parts of the country through the innovative mobile
banking units which number around thirty. Deployed in
1
SEYLAN BANK - Annual Report 2006
2
1 Seylan Bank set yet another first in the History of Banking by
waiving Stamp Duty on credit cards. Other taxes such as fuel
surcharge on credit & debit cards, debit tax on debit cards at
Point-of–Sale were waived off.
2 Director/General Manager/Chief Executive, Mr. Ajitha Pasqual
addressing the students at the Students savings
Get-together held at Waters-edge, Battaramulla.
18

Product Portfolio and Marketing
remote areas but working around the parameter of a
controlling branch, supported by a team of Business
Development Officers, the mobile banking units are able to
cover more localities and hence add more reach to our
services. Being a savings input for the rural areas, the
popularity of the mobile banking units has increased
significantly. This has given us the impetus to add on
facilities that would enable the people in these areas to enjoy
more benefits on a social platform including the addition of
multi media facilities with interactive options for children to
enjoy films or gain assistance from the Internet and
promoting our products through TV commercials.
Summarised below are some product development and
marketing initiatives conducted during the year that have
added to our ethos of being ‘The Bank with a Heart’.
Seylan Tikiri
Re-launched this year to ensure that
our unique product retains its promise
of being a comprehensive gift plan,
we continue to be the market leader
in this concept of a ‘Fun Way to Save’.
The gifts slabs have been increased to
11 with each slab having a choice of a minimum of two gifts
for children and teenagers to specifically choose from with
high value gifts including Swatch sports watches, DVD
players, electronic organs, BMX mountain bikes, diamond
pendants and mobile phones contributing to the gift range.
The Bank has taken the gift scheme further by enabling
minors to obtain gifts even from the network of mobile
banking vehicles that traverse the country.
Seylan Harasara
The senior citizens’ benefits from
Seylan Harasara were further
enhanced this year with the age limits
being extended to septuagenarians
right up to centenarians, as we
believe that senior citizens should
encompass all age groups, more so in their later years.
Senior citizens who have Harasara accounts already enjoy a
2% addition on the interest payable on their Fixed Deposits,
dedicated front office services, free membership to Ceylinco
SWIFT care and gifts on their 60th birthday. Until their
centenary, every ten years, Harasara also reimburses
medical bills from Rs.5,000 to Rs.20,000, in each nine year
period in between, increasing it by Rs.5,000, while also
reimbursing one year’s subscription to the Reader’s Digest or
any other publication on a one off basis.
Ceylinco FastCash
A definite revolution in the money
transfer industry, Seylan became the
settlement/custodian bank for
Ceylinco Fast Cash, a fast and reliable
money transfer system launched in
the Middle East through Ceylinco’s
subsidiary in Singapore, Ceylinco Express Remittance (Pte)
Limited. Developed by one of the largest IT companies in
Singapore, NCS Pte Limited, a subsidiary of Singtel Limited,
the remittance system is web enabled and uses state of the
art technology connectivity. The infrastructure is hosted in
Singapore with adequate protection for downtime and
redundancy and is activated through a network of authorized
agents licensed by the respective monetary authorities to
send and receive funds. In addition to a high reliability and
technology features, the product has a host of value added
services including a WishCard, a loyalty card which gives the
customer a unique identification number that logs in all
customer information into the system ensuring a faster
turnaround time for the remitting agent. Another unique
feature is the instant advice of the transfer to the beneficiary
and on receipt of funds, confirmation back to the remitter by
SMS. Initially targeting Sri Lankan expatriate workers,
essentially resident in the Middle East and with plans of
spreading worldwide, the product will have the add on
benefits of the conglomerate which will include insurance
cover, housing loans, cash delivery to homes, rewards and
prizes and the facilities of a Helpline in Colombo for
emergencies.
Suntel Re-Load with Seylan
The Bank tied up with Suntel, one of
the country’s most widespread CDMA
networks, to launch a unique SMS Reload
facility, a pre paid topping up
service integrating Suntel’s SMS
platform and Seylan’s state of the art
IT system. The option is open to Suntel customers who hold
accounts at Seylan Bank and aims to assist small and
medium enterprises by appointing them as dealers to
promote the re-load facility.
SEYLAN BANK - Annual Report 2006
19

Product Portfolio and Marketing
SEYLAN BANK - Annual Report 2006
Credit and Debit Cards
One of the most singular
achievements this year on the service
platform for credit cards has been our
bold decision to absorb the
government imposed stamp duty on all credit card
transactions, which otherwise saw a general slump in the
entirety of the sector. In line with our objective for 2007 of
being the best in customer service and also to support credit
card industry in Sri Lanka. We believe that this was a
landmark decision which no other credit card provider was
courageous to embark upon and we have given our
customers a definite tangible benefit. VISA credit cards
issued by Seylan posted the desired results this year despite
challenges we faced a significant achievement given that the
entire credit card industry saw declining growth over the
year. We also introduced the VISA Platinum card this year.
We ventured into yet another first in debit cards, issuing a
Debit Gold Card, which has been a great boon to customers
who prefer to transact business in a cashless environment
but still want to maintain a tab on their transactions. Into this
milieu, value additions have been introduced to encourage
customers to increase debit card usage with discounts at
merchants , free travel insurance for purchase of airline
tickets and absorption of Debit Tax on purchases. There is a
support network of 20 Million merchants both in Sri Lanka
and overseas. We have also enabled the debit card to be
linked to NRFC accounts giving migrant workers in the Middle
East the option of accessing their accounts and using the
debit card for their transactions.
The introduction of the Travelers’ Card offers only by Seylan
Bank is a boon for travelers as it replaces the hassles
involved in using travelers cheques. The card is usable at any
VISA ATM or Merchant outlet worldwide and can be obtained
in US dollars, Sterling Pounds, Euros or in Sri Lankan Rupees.
SMS alert after each transaction, free travel insurance, an
additional card with the main card are some of the exclusive
services provided.
Seylan Piyasa, Piyasa Velanda Nivasa and Piyasa Siri
Nivasa
We do know that
building a home
is not an easy
task and can be
fraught with
challenges and
hassles. With the introduction of the Piyasa range of housing
products, Seylan continues to take steps to eliminate the
challenges that exist in building homes and shop houses.
Value additions at a nominal charge were also introduced this
year with drawing and approval of building plans, obtaining
the necessary documentation from local government and
regulatory authorities, survey plans, preparation of other
documentation, structural, electrical and plumbing, drawing
and site supervision all being add on benefits extended by
the bank to those who obtain Piyasa loans. We have also
added a network of hardware merchants into our portfolio of
value additions to offer customers discounts between 5%
and 15% for any purchases that come under the loan
scheme. Ably supported by a very professional and
knowledgeable team, our efforts have been doubly
successful due to the excellent marketing and
communication campaigns conducted via traditional and
non-traditional communication channels.
Our unique shop house concept, Piyasa Velanda Nivasa saw
extensive growth this year with more emphasis being laid on
nurturing micro and small entrepreneurs. The value
extension to the Piyasa range was the introduction of Seylan
Piyasa Siri Nivasa offered to those who have already obtained
either Piyasa or Piyasa Velanda Nivasa loans for the purchase
of household items and furniture to complete their homes.
Next year will see a landmark introduction from Piyasa when
we launch the country’s first web based Virtual Land Bank,
which will in addition to having the buy or sell options
available in land and homes, also have architects’ profiles
and any other pertinent information for prospective house or
land buyers. We do believe the Virtual Land Bank will pose a
great benefit to those residing overseas specifically as they
will have access and a clear image of the real estate
products on the market to make informed decisions.
20

Product Portfolio and Marketing
Cool Cash
Designed specifically for youth
between 18 and 29 years of age, Cool
Cash encourages the savings habit
while entitling the saver to some
“cool’ benefits quarterly including a
draw for a Pulsar 180cc motorbike or
gold jewellery worth Rs. 150,000 for those with a minimum
balance of Rs 2,500 monthly for three calendar months. The
account also gifts Rs. 50 for every Rs 1,000 maintained in the
account at the time of the account holders’ birthday in
addition to the interest received. The interest rate is also 1%
higher than that of an ordinary savings account and the
customer can in addition, obtain a Cool Cash VISA electron
card and loan facilities dependent on repayment capacity.
their crops. They are also given the additional benefits of
insurance cover, a guaranteed price for their produce through
forward contracts, a compulsory savings account, free
technical expertise and leasing opportunities for equipment
and machinery.
Seylan Smart Lease
Therough a promotion that was
marketed as ‘Suzuki Maruti Mania’,
Seylan Smart Lease made owning a
car affordable. Giving six options of
vehicles at competitive leasing rates,
Seylan Smart Lease brought together
the benefits of convenient rentals and flexible repayment
schemes to suit varied customer budgets.
Seylan Merit Rewards
Seylan’s flagship pioneering rewards
scheme, Seylan Merit Rewards works
on the concept of constantly evolving
to suit the changing needs and
expectations of the customer. All
personal current or savings account
holders who conform to a simple minimum balance
requirement for six calendar months are rewarded with gifts
and grants on specific occasions and not through a draw or a
loan. While maintaining a minimum of Rs 20,000 and
Rs 10,000 respectively in savings or current accounts,
customers gain a host of benefits including reimbursement of
surgical expenses, grants for professional education, a gift of
Rs 50,000 in recognition of winning an international event
and Rs 25,000 in winning a national event in sports, arts,
drama or music, Rs 25,000 in the case of a bereavement in
the family, gifts in the event of marriage, births, 60th birthday
and golden wedding anniversary, cash assistance in the case
of accidental or natural disasters affecting the customer and
Rs 50,000 as a grant for inventions recognized by the
Registrar of Patent Rights.
Seylan Govi Saviya
Meant as a process of lending a
helping hand and in recognition of the
toil and hard work the farmers have to
undergo in their chosen vocation,
Seylan Govi Saviya enables farmers to
obtain loans at concessionary rates to
ensure an improvement of their lifestyles and good value for
Seylan NRFC Thilina Sayura
Building relationships with all strata of
customers, our concept of rewarding
NRFC and RFC account holders,
devoid of a draw in the event they
require urgent funds was a pioneering
effort in Sri Lanka. For those with a
minimum of US $500 over a period of six calendar months,
this product enables the customer to obtain cash gifts in the
event of completing or purchase of their own home, at
marriage, in the event of excelling in sport, the arts or drama
internationally, for a child’s excellence in studies, surgery,
bereavement and if having to return to Sri Lanka due to an
emergency or any other problem.
Seylan Shakthi
This is a four year fixed deposit
scheme that contributes towards the
paying of utility bills. Seylan
undertakes to pay electricity and
water bills up to 0.1% of the deposit
value monthly for the first year of
deposit, considerably reducing the burden of settlement of
utility bills. In addition, instant loans of up to 90% of the
deposit value can also be obtained, while Seylan has initiated
partnerships with Singer Sri Lanka for household appliances
and Jinasena Limited for agricultural equipment to be
purchased under Seylan Shakthi. This infuses purchasing
power to the customer without liquidating available deposits.
SEYLAN BANK - Annual Report 2006
21

Corporate and Foreign Currency Banking
Some of the strategic policies and astute plans implemented
about three years ago in managing non-performing areas and
recoveries were concluded last year and 2006 proved to be
the year that these imperatives bore fruition. The three year
strategy assiduously put into place directed our performance
upwards, with the year posting a record high profitability,
especially in the foreign currency banking unit.
Having controlled the non-performing advances to
reasonable levels and cleaning up our books substantially,
2006 began afresh allowing us to implement a number of
initiatives that would make a difference to our bottom line.
Our books therefore are much stronger and lending quality
dramatically improved. Working on a qualitative platform, we
were also able to add quality accounts to our portfolio,
continuing our strategy of building a “Quality Book of Trade
Finance’ and having begun to implement the Scorecard
approach for evaluation. These have all strengthened our
balance sheet and increased our profitability levels in both
divisions.
only helps us in our corporate banking but is utilised
throughout the bank for credit scoring and credit rating to
ensure astute judgements on credit risk evaluation. This has
laid the foundation for a better risk based pricing and capital
allocation environment, while also enabling a more rational
approach to capital and pricing. While we acknowledge that
to be well rounded the entire process will take a few years,
having laid a solid foundation to meet this goal, we are
confident that we have built the necessary trusses and
support imperatives around it to obtain the best possible
results in future years.
Another IT initiative implemented to collaborate the
strengthening features we have introduced into the unit was
integrating customer details via an efficient Management
Information System (MIS). Consolidating our IT platform
through this initiative, we also initiated some changes to
facilitate a comprehensive customer profile at the simple
click of a button. The benefits of this move are anticipated
during the next year.
SEYLAN BANK - Annual Report 2006
Volumes and potential in our foreign currency banking unit
have improved dramatically. The interest rate milieu has
stabilised and the prime rate settled down. The latter is
poised to come down next year and hence, we saw a peak
this year. Off shore lending, particularly to the Maldives was
augmented with the diversification within and outside
Sri Lanka helping us to minimise credit risk. We also
participated in a few international syndicates along with
some other Sri Lanka banks with the most recent one being
in the Maldives.
One area that posed a challenge to us during the year was
the tight monetary policies implemented by the Central Bank
on Rupee lending, which led us to increase interest rates as a
response to this tightening environment in both policy and
liquidity. This effect unfortunately was permeated to
corporate clients which in effect saw them face a high
interest regime. In tandem, deposit rates too increased.
We fervently hope that next year will see a stabilisation of
interest rates and the spiralling inflation which we saw this
year controlled, as we feel this has a far reaching effect on
the macro economic picture of the country.
One of our highlights this year was the external credit scoring
facility implemented as a pilot project. Having sourced the
software from a reputed Indian IT company, the facility not
It must be noted that in the bigger picture of the Bank and in
the internal picture of the unit, customer service remains the
key to our success. We have continued our customer
strengthening moves throughout the year with the annual
Christmas get together and personal one-to-one
visits/discussions and dialogues as we have always believed
in building and strengthening relationships on the essential
component of service excellence to retain and attract
customers. Training on service imperatives therefore remains
an integral part of our training calendar while technical and
specialist areas too get undivided attention. At least forty
hours of training per every member of the unit is compulsory
and soft skills on attitudinal transformation, service and
anticipating customer expectations and delivering beyond
expectations all become vital areas inculcated into training
and development.
We introduced new processes into corporate credit
evaluation with a new format that encompasses all aspects
including a rating system. This streamlining process is the
first phase which paves the way for the second phase to be
implemented in 2007, which will utilise our sophisticated IT
platform to perform a complete and thorough evaluation.
This will involve extracting figures from the system,
evaluating and rating them and working out capital
requirements, prior to a final report.
22

Corporate & Foreign Currency Banking
Our restructuring and realignment process also took
substantial attitudinal change and development, which was
addressed within the training programmes and workshops in
the last two years. Our approach to dealing with customers
who were experiencing unfortunate times was to create an
enabling environment, restructuring their credit portfolios on
a win-win platform. This cut back our delinquent portfolio a
great deal enabling us to post positive results in our books.
Genuine business failures were dealt with humanely with
solutions found patiently and incisively.
We strive to continue on our axiom of being a bank with a
heart which has been a fundamental aspect of the success
of the Bank. Tthe initiatives we have implemented in the
process of restructuring and gaining a renaissance in our unit
have been mapped out according to that maxim.
Sharebroking and Leasing
Leasing
The Leasing business this year has shown commendable
growth, an increase of 25.53% over last year’s profitability.
The portfolio too saw an increased presence of 14.29%,
which in a very competitive industry, rising interest rates and
prohibitive tax regimes, is extremely significant.
Innovation has been one of our key strengths and this year
too, in studying the market, the Leasing Division
implemented a number of initiatives that spurred growth.
Seylan was the pioneer in introducing the step up payment
plan and flexible payment plan which has been a boon to
numerous customer segments, especially those in the micro
and SME sectors, giving options that would suit a customised
payback pattern.
We partnered two organisations this year to enable leasing of
vehicles to be done with speed and efficiency. General Sales
Company for the Balero Load Carrier for three months and
Associated Motorways Limited for the Maruti and Suzuki
ranges for two months which both contributed significantly to
our bottom line.
All 51 branches are now totally IT integrated with nearly all
manual processes eliminated and the next step earmarked
for next year is that all online approvals including all
documentation will be available at the click of a button and
all branches completely automated.
Share Broking
With the volatility experienced this year, we did not
concentrate on share broking aggressively, although we did
continue to service the current customer portfolio.
Hence profitability remained flat with margin trading showing
no upward growth momentum.
We did however pursue a partnership with our associate
company Seylan Merchant Securities which we hope will be
the panacea for a better year ahead and an increase in our
customer portfolio.
SEYLAN BANK - Annual Report 2006
23

Development Banking
The Development Banking department being the unit set up
over 3 years ago with the objective to fulfill the mission of
our Chairman Deshamanya Dr. Lalith Kotelawala to uplift the
living standards of segments in the society that have no
avenues for credit, continued its activities providing financial
assistance for the SMIs and SMEs and other individuals who
are in need of such assistance. Whilst working towards
fulfillment of the above objective, the Bank funded certain
medium and large scale projects identified as projects with
some national interest.
In addition we have also actively participated in providing
assistance to the people from remote areas where electricity
through main grid was not available, to electrify their houses
through Solar Home Systems. We have been able to consider
2300 loans totaling to Rs. 102. million for this sector.
A company who ventured into manufacturing of automobiles
in Sri Lanka was financially assisted to make their dream a
reality. We are proud that this company has been successful
in winning a number of tenders from reputed business
organizations in Sri Lanka to supply their van, amidst heavy
competition with a number of other similar imported vehicles
available in the market. The Bank has continued to assist this
company to perform such orders with the objective of
ensuring that this project will be a success and will be
catering to the domestic market for automobiles in future, at
least with a small market share.
We also continued the programme implemented by our
Chairman to visit different parts of the country and conduct
meetings for prospective entrepreneurs who need financial
assistance, without waiting till they come to the Bank with
such requests. These meetings were conducted as credit
clinics and one such instance was the meeting we conducted
at Halpe in Katana which is situated on the outskirts of
Negombo where nearly 70 applicants were interviewed and
the entrepreneurs were selected from dairy farming to
building constrution to assist with required financial
assistance.
Further, we were sucssfull in completing 3 projects in
Angunukolapelassa, Beliatta and Tangalle for the upliftment of
living standards of 30 families of disabled/demised soldiers of
A hoarding of the Chairman at a site of a ‘Credit Clinic’
Site of a ‘Credit Clinic’
SEYLAN BANK - Annual Report 2006
Site of a Brick making place
A goat rearing farm
24

Development Banking
the armed forces by providing three wheelers on easy
payment terms as directed by our Chairman, considering this
activity as a CSR (Corporate Social Responsibility) projects.
In this exercise we have achieved over a 25% growth in the
level of loan disbursement touching to Rs. 1.8 billion as at the
end of the year 2006 granting loans over 3700 clients in
agriculture, horticulture, fishing, industry, construction
contracting, packaging, protective wear, infra-structure,
commercial buildings and pledge Loans for traditional
agriculture produce such as maize, green gram etc. and
thereby contributed towards the socio-economic
development of a needy sector. We are also proud that with
our continuous efforts to assist the SMIs and SMEs and other
individuals, we have been able to maintain a recovery ratio of
80% whilst maintaining the quality of the portfolio at an
acceptable level.
Small and Medium Enterprise Unit
A landmark division that was launched in the latter part of
the year, the SME division is one which has inbuilt into its
entire operations, the development and sustainability of small
and medium enterprises, a segment of entrepreneurs and
business organisations that generally have to contend with
numerous challenges even though it can post a massive
contribution to the national economy. A relatively new
concept in Sri Lanka, the SME division is just being
established and is modelled on some examples in the Asian
region which have focused primarily on the SME sector as an
engine of growth.
A relatively smaller division in the bank at the beginning, it
will be positioned as a hybrid product between corporate
banking and retail banking. There has been much emphasis
on corporate banking in recent years and little on lucrative
areas like retail and trade, which in reality poses larger
margins and less risks in the longer term. In the current
environment, SMEs do have challenges and are not educated
or knowledgeable enough in the workings of a business
environment especially in the area of having proper Financial
Report, management techniques and governance structures,
all imperatives for bank funding. Our aim is to take a
different view of the SME sector, assist in the administrative
and financial aspects while funding their enterprises, which
will essentially be a hands-on exercise from the start.
Our figures as at the end of December 2006 since our soft
launch in October 2006 encompasse about Rs.167 million in
loans, Rs.65 million in deposits and a profitability of
Rs.3.5 million with all loans showing signs of complete
performance. Being a local bank that has been identified as
one that believes in growing solid relationships especially
with those segments which have been sidelined to a great
extent, this strength will give us the impetus to post a
dynamic growth curve next year, while maintaining our
customer portfolio to about 200 operative customers.
SEYLAN BANK - Annual Report 2006
25

Agricultural Banking
Another of the Bank’s initiatives in assisting entrepreneurial
segments of society, Seylan Govi Saviya concentrates solely
on agricultural lending to farmers who find reasonable
funding avenues unavailable to them. While the Bank availed
itself of the Central Bank assisted NCRC scheme, given the
dire need in uplifting this segment of the population who
have to earn their livelihoods in extremely challenging
circumstances, the Bank utilises its own funds together with
a package of facilities including priority for employment to
children, insurance cover for crop failure, illness, disability
and death and other additional benefits that would be
advantageous to the farmer.
Using the synergies of other companies within the Group,
Seylan set up the Seylan Govi Arakshaka Aramudala together
with Ceylinco Insurance which currently has a balance of LKR
9.8 million in the fund. Disbursements of claims during the
year have amounted to LKR 4.9 million and in the 2005/06
Maha season, we advanced a total LKR 77.0 million
(cultivation). Recovery rate stands at a commendable 85%
with the NPL portfolio at Rs. 6.4 million and total outstanding
at LKR 12.9 million. We disbursed LKR 60.0 million as
advances during the 2006 Yala season with total outstanding
at present being Rs. 37.0 million. Our customer portfolio
currently is at 4,100 and 190 farmer societies. We also have
the value addition of forward sales contracts for paddy and
maize, pledging Rs. 65.0 million during the Maha season.
Negotiations are underway with Ceylon Grain Elevators and
other partners who would buy farmer produce from the next
seasons onwards to give farmers an assured buyer at the
end of their cultivation season.
More benefits were added to the portfolio this year with
Seylan Govi Kedella, enabling farmers to utilise the Bank's
funding for housing at a nominal 0.5% below the regular
lending rate for housing facilities. The savings culture is also
being imbued into the farmer community with an added
incentive of an additional 0.5 % over the normal savings rate
being given to farmer savings, in which they must save a
minimum of Rs. 1,000/- at each cultivation season.
Grameen Banking
SEYLAN BANK - Annual Report 2006
A relatively new segment within the Bank that has been
formulated on the vision of Chairman Deshamanya Dr Lalith
Kotelawela, Grameen Banking was set up in March 2005 on
the tenets of Nobel Laureate Dr Muhammad Yunoos. Working
on the principles of uplifting the poor to make them
sustainable, the Bank’s Grameen department has performed
exceptionally well having touched 250,000 people in this
short span of time.
Micro financing has been a long felt need in Sri Lanka and
the Bank has thus fulfiled a vital niche that has thus far not
been focused upon. Total advances since inception have
been about Rs.3.8 billion with 2006 figures being Rs.2.6
billion. One of the most significant aspects of Grameen
banking has been that the recovery rate has been 100%,
attributable to daily monitoring, imparting technical advice
and consultation which have led to very strong relationships
being nurtured with our micro entrepreneurs through the
Ceylinco Grameen Group.
With loans varying from Rs.10,000 to Rs.100,000 for each self
employment project worked on a gradient and payback
ability, the Bank added a value extension this year by
providing housing facilities for those who are funded up to
Rs.40,000. The loans vary and include shop/house loans as
well as agricultural loans which are disseminated by the
Grameen Credit Company.
26

Private Banking
We continued our ethos of building and nurturing
relationships which is the essential tenet of private banking.
Our customer portfolio thus has achieved a substantial
growth in high net worth clientele. Our focused approach
and value additions together with the ability to cross sell and
leverage the strengths we have within the Group have seen
significant advantages in growing this portfolio.
Customer Service remains our focus in the next year and we
do realise that with the competition in this segment of
service being very intense, we must ensure that our skills and
knowledge base continues to improve.
The dedicated Relationship Manager and the open door
policy to any customer who requires advice, consultation or
even discussion with any of the hierarchy of the Bank
remains accessible and the norm.
The simple yet effective service strategies already
implemented will continue to be built upon next year and we
do believe we can continue to grow and meet the required
targets for next year.
Operations and Business Process - Re-engineering
In line with our mission to become the best bank in Sri Lanka
delivering the best customer service in 2007, our operations
and business process re-engineering initiatives have
continued in line with the plans laid out in earlier years.
Resultant to this, our concentration has been focused
primarily on business development, suppliers, the entire
operations across the bank and IT which are vital support
conduits in achieving this objective.
We are currently in the process of upgrading and refurbishing
the internal layouts and external facades of our branches for
more attractive visibility as well as a better ergonomic
environment to conduct customer business. Some branches
may even relocate to meet the ultimate goal of giving
customers superior service. The entire upgrading and
refurbishing process is aimed for completion in 2007.
Running parallel to the hardware upgrade, we have continued
to concentrate on extensive and expansive training and
development in customer care to our whole team, which,
with increased efficiency levels in IT currently being
implemented, will give us the edge in service excellence.
To this end, we analysed the processes that are involved in
various functions of the bank and moved to remove ancillary
services, especially in the service functions in order to allow
those team members to concentrate solely on customer
service and in a bid to reduce and manage costs. Hence
ancillary support services including the maintenance of ATMs
and transport services will be outsourced. Cheque printing
was already outsourced this year, with an online support
system for requisitions which enables cheque books to be
printed and delivered in just one day. While this brings about
a much speedier service for customers, it also gives our team
members more time to concentrate on servicing the
customer in a more holistic way.
In addition to the above, one of the most significant
achievements this year was the complete integration of the
cheque truncation system across the banking industry in
Sri Lanka, a transfer process which Seylan completed
admirably.
SEYLAN BANK - Annual Report 2006
27

Information Technology
SEYLAN BANK - Annual Report 2006
Having already infused the initial IT platforms in place, all core
services are now fully automated at Seylan, establishing a
state of the art IT platform in addition to an excellent security
system governed by comprehensive IT policies. We strongly
believe that technologically advanced IT applications can be
the powerful drive in contributing towards competitiveness
and profitability. Seylan has revolutionised IT banking,
infusing a culture where banking can be conducted anytime,
anywhere using delivery channels that stand on par with any
in the world. These electronic delivery channels include
products and services that have been built on global
standards but with a local outlook and includes Internet
Banking, SMS Banking, the Seylan Payment Gateway, ATMs,
Leasing, Overseas Exchange Houses, a fully equipped
computer training laboratory, Ceylinco Fast Cash, Seylaphone
Banking, Online Shopping, Automated Mobile Banking and E-
learning.
In tandem with developing multi-faceted IT delivery channels,
our focus remains aligned to following international
standards especially with regard to quality and security and
we have thus, commenced the necessary processes to
achieve ISO 27001 certification for security standards.
Internet Banking
Internet Banking opens a panorama of financial services at
the click of a button bringing the true reality of banking
anytime anywhere to our customers. Seylan’s Internet
banking website is www.eseylanet.com
SMS Banking
Seylan is proud to be the only bank in Sri Lanka with all
mobile operators present in Sri Lanka connected to SMS
banking. The J2ME enabled SMS product provides additional
benefits to customers including access to their finances via
Dialog GSM, Mobitel, Celltel, Hutch and Suntel. SMS facilitates
inquiries on accounts and credit cards, transfer of funds
between accounts, utility payments and mobile phone
reloads in addition to SMS alerts.
Payment Gateway
The payment gateway now includes about 15 vendors which
include high profile corporate and service solution providers
such as e-channelling, The Finance Company, Ceylinco Life
and Ceylinco Grameen.
ATM
Subsequent to evaluations based on the stability and the
tech-savvy nature of the ATM network, both local and global
financial institutions have requested to share Seylan Bank’s
ATM network. The Bank therefore has begun a pilot project to
accommodate other non bank financial institutions onto our
own ATM network, a process that is being fine tuned at
present before full scale operations are launched this year.
All preliminary work to upgrade the ATMs in order to meet
new EMV regulations has also been completed in 2006.
Leasing
Leasing has also seen an input of IT into its processes to
ensure that our leasing business gets a boost to remain in
the leadership stakes and to ensure that competitiveness and
productivity is enhanced. The leasing module was
implemented during the last quarter of 2005 with the roll outs
to the branches continuing throughout 2006 with expected
completion in the third quarter of 2007.
Overseas Exchange Houses
Having seen the success in automating the fund transfer
from our Exchange Houses, we have now enabled them to
transfer funds online to any Seylan Bank account in Sri Lanka
with the additional benefit of an SMS alert automatically
generated to the sender and to the beneficiary on
disbursement of funds.
Fully equipped Computer Training LAB
With ICT being a fundamental growth platform in gearing for
the future, we now have a fully equipped computer
laboratory which will be used for effective training and
development in IT competencies.
Training Staff on Use of ICT
In taking the concept of training and development further, we
are also utilising the services of external ICT training schools
for basic, intermediate and expert training. A benchmark test
is administered to ascertain staff levels of expertise and
training and development worked according to those results.
Ceylinco Fast Cash
The newest delivery channels into our ever evolving product
stream, the Ceylinco Fast Cash remittance system replaces
the services provided by Western Union with a host of unique
features including SMS alerts, monthly draws and insurance
schemes. The implementation of this project was carried out
by National Computer Systems, Singapore
28

Information Technology
Seylan Phone Banking
Seylan Phone Banking or Seylaphone as the product name
goes has become a widely used tool for banking purposes.
Fixed line touch tone phones or mobile phones enable
customers to use this facility free of charge in the preferred
language. It runs in tandem with Internet Banking offers.
Online Shopping
“Seylan Online Shopping” is a showcase for small and
medium scale entrepreneurs to gain entrance to the
international market, while also posting a number of
internationally recognised reputed merchants to market their
products through the Internet. The dedicated website
www.seylaphone.com enables customers to view a
comprehensive list of products including features, functions
and prices.
Automated Mobile Banking
As another first in banking technology in Sri Lanka, Seylan’s
fully computerised ‘Bank on Wheels’ takes banking to the
most difficult parts of the country that sometimes do not
even have the facility of a telephone connection. We believe
this takes our idea of being a ‘Bank with a Heart’ that much
further as local communitie now have the conveniences of
banking at their doorstep and has helped us strengthen and
build relationships with communities around the country.
E-Learning
Using it as a tool to develop education in the more difficult
and remote parts of the country, this internally developed
learning product enables centrally transmitted speeches,
educational lectures and virtual workshops to be conducted
branch wide in any part of the island, broadcasting it through
a virtual private network with the added benefits of an
interactive Q& A sessions and multi-media interfacing adding
further impetus to the learning process.
SEYLAN BANK - Annual Report 2006
29

Treasury and International Operations
SEYLAN BANK - Annual Report 2006
The market remained volatile during the year but the rapid
fluctuation of the exchange rate enabled the treasury
department to turn in positive results. The significant gains
posted this year showed a growth of 12.68% over last year
giving us a profit in exchange trading for 2006 of Rs.501
million compared to Rs.565 million last year. However, the
mark to market gains on the trading portfolio was
underpinned due to the adverse effects of upward
interest rates.
The Runner Up award for Treasury Excellence won at the
Asian Banking Awards two years ago, laid the foundation for
the department to continue to strive towards better
performance and higher growth curves.
Our import and export portfolio displayed good performance,
exceeding targets and budgetary forecasts. The import
portfolio grew by 5% while exports increased by 7.02%, which
with volumes increasing saw a strengthening of our
corporate portfolio as well.
Trade Services posted a modest growth this year, increasing
profitability and volumes on an average of 8%. With trade
services having been centralized last year, we now see the
fruition of those streamlined procedures and mechanisms
and branches, being able to concentrate more on customer
service and are proud that we continue to possess one of the
most technologically advanced import/export automated
systems in the country. We aim to pursue web based
operations next year to integrate IT more into our daily
activities and have documentation and approvals on line to
ensure a speedier service environment.
Several landmark initiatives in the past have laid the
foundation for strong and robust international remittance
business at the Bank and this year too, we augmented the
strategies that were already in place in order to cater to the
Sri Lankan migrants living and working overseas. Using the
advantages of integrating IT into international operations, we
expanded our remittance services to non-resident Sri
Lankans residing overseas providing a cost effective and
secure method of transferring funds into Sri Lanka. Currently
our strengths lie primarily in the Middle Eastern countries
which contributes 60% of the total worker remittances to
Sri Lanka.
We continue to reach out to newer markets and newer
customer profiles seeking opportunities and methodologies
for more efficient and speedier delivery channels, enhancing
our networks and alliances. The latest leading alliances we
have partnered during the year include XPress Money
Transfer Service through the UAE Exchange Centre of Dubai,
Speed Cash Now through the Saudi American Bank of Saudi
Arabia, EZ Remit Money through the Bahrain Exchange
Company, Money Gram from MoneyGram International
Limited, AFX Remit with Al Fardan Exchange in Qatar, Instant
Cash from the Wall Street Exchange in Dubai and DFast from
the Doha Bank in Qatar.
Our strategic tie-ups with ten leading remittance service
providers for online money services enable us to meet our
objective of fund delivery faster. Probably the most
revolutionary money transfer solution was introduced by the
Group this year through Ceylinco FastCash with Seylan being
the settlement/custodian bank. Ceylinco FastCash launched
in the Middle East through Ceylinco Express Remittance (Pte)
Limited in Singapore, was developed by one of the largest IT
companies in Singapore, NCS Pte Limited and is a web
enabled remittance system poised to take the remittance
industry to a newer realm.
We also introduced rewards and value additions to our
Ceylinco Money Transfer Service enabling customers to enjoy
more benefits by using our services. These include housing
loans, insurance cover and through Ceylinco FastCash we
offer chances of winning for each remittance with a bonus
prize of Rs.1 million, 100 consolation prizes of Rs.10,000 each.
We extended our services into a social platform this year by
repatriating a large number of expatriate housemaids in
Lebanon and Kuwait who were left standard and bereft due
to instability in those countries. This service is being
continued whenever such a need arises. In addition, Seylan
customers who return from overseas employment, are
funded a start up business on a shop/house concept to
ensure that the money they have earned is invested
judiciously, on a sustainable platform.
The country’s economy continues to be largely dependent on
foreign remittances which in 2006 amounted to Rs.21 billion
with 2007 projected to be around Rs.30 billion. Seylan
continues to be in forefront of handling foreign remittances
with a substantial market share and we aim to increase this
share in 2007.
30

The Future
2007 will mark a new paradigm for Seylan Bank when we
embark on our very challenging journey of being the Best Bank
in Customer Service. With financial institutions essentially being
built upon the platform of service, excellence in service has
become a fundamental pivot in customer loyalty and customer
retention. Stakeholder expectations on service standards also
continue to increase, while around the world sustainability of
any organisation is measured by the aggressively pursued
constantly improving standards of service excellence.
In this milieu therefore, Seylan firmly believes that in service lies
the key to success, to strengthening of customer relationships
resulting in continued sustainability. Our performance this year
proves that our strategies are converging in the right direction;
that our fundamentals are on a precise course to creating the
journey towards superior service. The Bank with a Heart has
within its very core the philosophy of service above self to
individuals and the community at large and it is this that has
given Seylan the impetus towards a future that will recreate and
revolutionise the precepts of service excellence, giving to all our
stakeholders a new service model that leads the way for others
to emulate.

Board of Directors
3
2
1
SEYLAN BANK - Annual Report 2006
1
DESHAMANYA DR LALITH KOTELAWALA
A.M.Ex.A.(Lond), F.B.I.M., M.I.C.M.(Lond & Sri Lanka),
FIMgt (UK), HFIB (Sri Lanka), FABE(UK), PhD(Sri J).
Chairman/ Managing Director
Chairman/Managing Director since the inception of the Bank
in 1987. Chairman of over 250 companies under Ceylinco
Consolidated with many market leaders, over 30,000
employees, over 450 branches and 15 branch offices around
the world. Responsible for the establishment and steering
of the Ceylinco Sarana Fund, a social and charity fund 24
years ago for the upliftment of the under privileged people
in the country. Introduced and set up the Grameen Banking
concept (banking to the poor) which has over 90,000
customers with a commendable recovery rate.
Was appointed the Chairman of the Economic Development
Commission of the North Western and Central Regions
during the years 2003/2004. Was honoured with the
Doctorate of Literature Honoris Causa by the Management
Faculty of the University of Sri Jayawardenapura in March
2003. He is also the Honorary Consul General for Singapore
in Sri Lanka.
2
HON. SICILLE P C KOTELAWALA
Jt. Deputy Chairperson
Appointed to the Board on 8th August 1996 and was
designated as its Joint Deputy Chairperson on 1st April 2004.
She is the Deputy Chairperson of Ceylinco Consolidated,
The Finance Company (TFC), Ceylinco Limited (Ceylinco
House), Ceylinco Universal Group and the Ceylinco Hotels
Group. She is also the Joint Deputy Chairperson of the
Ceylinco Savings Bank Ltd and is also closely associated
with the Jewellery and Diamond entities of the Ceylinco
Group.
She is the Honorary Consul General for the Republic of
Cyprus in Sri Lanka, Counsellor for International Trade for the
Kingdom of Belgium. She is the Representative of Asia
Society NY in Sri Lanka and a Member of its International
Council. In May 2005 she received the award “The Leading
Women Entrepreneurs of the World 2005" awarded by the
Star Group – USA held in Vancouver, Canada.
She was also knighted with the ‘Order of the Crown of the
Kingdom of Belgium’ by His Majesty King Albert II King of the
Belgians in November 2006. She was inducted in November
2006 to the Women’s Leadership Board of the Harvard
University, John F Kennedy School of Government in Boston,
USA.
3 DESHAMANYA DR P R ANTHONIS
D.Sc, F.R.C.S. (ENG), F.I.C.S., F.S.C.S.
Director
Appointed to the Board from the date of incorporation of the
Bank in 1987. An eminent Surgeon the country has
produced, he has held many distinguished posts in the past
viz. former Chancellor – University of Colombo and
32

Board of Directors
4
5
6
University of Ruhuna, Former Senior Surgeon – General
Hospital Colombo, Founder President, Ceylon College of
Surgeons, President Sri Lanka Medical Council, to name a
few. Recipient of several prestigious awards/honours viz:
“The Order of Sacred Treasure of Japan” awarded by the
Government of Japan, ‘Deshamanya’ (the first citizen who
received this honour) awarded by the President and “Viswa
Prasadani” honour by the Prime Minister in 1986, “Salya
Vaidya” honour granted by Chancellor Vidyalankara
University and “Pride of the Medical Profession” honoured
by the College of General Practitioners of Sri Lanka.
5
A M PASQUAL
B.Sc. (Busi.Admin.), USA
Director/General Manager/Chief Executive Officer
Joined Seylan Bank in January 2003 as the Additional General
Manager, was appointed General Manager/Chief Executive
on 1st January 2004 and as Director on 12th January 2004.
Counts over 25 years experience in Banking. Commenced
his Banking career with Hongkong & Shanghai Banking
Corporation in June 1980 and has had wide experience and
exposure in Corporate Banking, Trade Finance and Treasury.
4
R RENGANATHAN
6
MS M SABARATNAM
FCA, FSCMA
Jt. Deputy Chairman
Attorney-At-Law & Notary Public
Director - Legal
Appointed to the Board of Seylan Bank on 8th August 1996
and soon after was appointed Executive Director of the
Bank. Currently functions as the Joint Deputy Chairman of
the Bank, Chairman of Seylan Bank Asset Management Ltd
and Deputy Chairman of many companies under Ceylinco
Consolidated mainly in the field of banking and healthcare.
He is also the Chief Executive Director (Life) of Ceylinco
Insurance Co Ltd, which is the market leader in the Sri Lanka
insurance industry. As Deputy Chairman of Ceylinco
Healthcare Services Ltd, he is currently spearheading the
setting up of the first Private Sector Radiation Treatment
Centre.
Appointed as a Director of Seylan Bank on 28th April 1997
and is in charge of legal issues of the Bank. Deputy
Chairman of several Ceylinco Consolidated companies.
Was involved in conceptualising, incorporating and operating
the Ceylinco Building Society. Has wide experience in
property development and all aspects of real estate, credit
management, factoring, debt administration, restructuring
loans, and credit evaluation. As Director Legal/Chief Legal
Officer of the Ceylinco Group, has wide experience in all
aspects of corporate law, law of property, personal laws,
recovery, finance, banking and insurance and corporate
secretarial work.
SEYLAN BANK - Annual Report 2006
33

Board of Directors
9
8
7
7 S C O DE LIVERA
J.P.U.M., Attorney-At –Law, Solicitor & Notary Public
Director
Authority as an advisor on upgrading of banking supervision
capabilities in Maldives. At present serves as a Financial
Consultant to the Ceylinco Group.
SEYLAN BANK - Annual Report 2006
Appointed as a Director of Seylan Bank on 28th April 1997.
Was a State Attorney in the Department of the Attorney
General from end 1954 to February 1975 in charge of civil
litigation. From 1988 Senior Partner in the Legal Firm of
M/s De Livera Associates engaged in all aspects of civil legal
matters including company and corporate matters, patents
and trademarks and all aspects of notarial work. Acts as the
Chairman of the Audit Committee of the Bank.
8 P T SIRISENA
Bcom (Hons), M.A. (Econ.)
Director - Compliance
Appointed as a Director of Seylan Bank on 28th March 2005.
Acts as the Chairman of Integrated Risk Management
Committee of the Bank. Has extensive experience in
financial markets and banking supervision and regulation.
Has held several senior positions including the post of
Director, Bank Supervision and Director of Financial Markets
during his employment at the Central Bank of Sri Lanka.
Played an active role in the financial sector reform program
undertaken during the previous decade. Based on his
experience, the Asian Development Bank provided him with
the opportunity of working for the Maldives Monetary
9 K A S JAYATISSA
ACIS, FSCMA, Dip.in.Acct., BSc (Mgt) Sp.Hons., FCA
Director
Appointed as a Director of Seylan Bank on 14th December
2004. Commenced his career as a Superintendent of Audit
at the Auditor General's Department and is a specialist in
Financial Management, Taxation and Education. Deputy
Chairman/Chief Executive Director of Ceylinco Educational &
Financial Services Group of Companies including Ceylinco
Sussex Educational Services Ltd having the largest English
medium school network in Sri Lanka. Also acts as the
Director Finance and Treasury of The Finance Co Ltd and as
Finance Director of several other companies of Ceylinco
Consolidated. ‘Ceylinco Upadhidharee Vyparika Shakthi’ and
‘Ceylinco Thakshanika Nipunatha Shakthi’ are innovative
projects coming under his direct purview
34

Board of Directors
10
11
12
10
S K M PERERA
12
J G S DE SILVA
Director – Information Technology
Appointed as a Director of Seylan Bank with effect from 28th
April 1997 and is in charge of Information Technology of the
Bank. Also the Deputy Chairman/Chief Executive of the
Golden Key Group of Ceylinco Consolidated and Director -
Information Technology of The Finance Co. Ltd and serves on
the Board of a number of other companies under Ceylinco
Consolidated. Chairman of Barter Card Lanka Limited.
11 A D JEGASOTHY
Attorney-At-Law & Notary Public, F.I.C.M, F.C.I.C.,
M.I.C.M.(LOND)
Director
Appointed to the Board from the date of incorporation of the
Bank in 1987 and was also acting as Joint Secretary of the
Bank until 1999. Prior to joining the Ceylinco Group as Legal
Officer in 1974, was attached to M/s De Silva & Mendis,
Solicitors and Notaries Public. Was also associated with M/s
Coward Chance, Firm of Solicitors, UK. Counts over 30 years
of experience in financial and legal sectors. At present holds
the position as Deputy Chairman/Managing Director of
International Consultancy and Corporate Services (Pvt) Ltd
which handles corporate secretarial matters for many
companies in the Ceylinco Consolidated. A member of the
Audit Committee of the Bank.
Director – International & Development Banking
Appointed as a Director of Seylan Bank on 11th May 2007.
Mr De Silva joined Seylan Bank in March 1989 and has held
the position of Branch Manager, Area Manager, Senior
Manager – Corporate Banking. He has also headed the
Credit Control, Legal & Recoveries Divisions of the Bank as
Chief Manager and Assistant General Manager and headed
the Regional Banking Division as Deputy General Manager.
Prior to being appointed as a Director, Mr De Silva was
functioning in the capacity of Senior Deputy General
Manager – International & Development Banking. He counts
over 38 years of experience in the banking field which
included service at Grindlays Bank, Colombo, Emirates
International Bank Ltd, Dubai, Bank of Credit & Commerce
International Ltd (BCCI), Colombo and at Seylan Bank Ltd
since 1989.
SEYLAN BANK - Annual Report 2006
35

Senior Management
1 2 3 4 5
6 7 8 9 10
11 12 13 14 15
16 17 18
SEYLAN BANK - Annual Report 2006
1. Mr Ajita Pasqual, BSc - Econ & Business Administration - Director/General Manager/Chief Executive 2. Mrs Leonie Seneviratne, AFA (UK) - Senior DGM - Region I
3. Mr Chandrasiri Kotigala, Attorney-at-Law & Notary Public Company Secretary, Senior DGM - Legal 4. Mr Ajantha Madurapperuma, CFA (USA), MBA, FCMA (UK),
AIB (Sri Lanka) - Senior DGM - Corporate & Foreign Currency Banking 5. Mr Pandu Jayamanne, DGM - Administration/Small & Medium Enterprises Unit 6. Mr Samuel
J Jebaratnam, AIB (Sri Lanka), PGEDBM (IBSL), MBA (Si J'pura) - DGM - International & Human Resources 7. Mr S H Indrapala de Silva, AIB (Sri Lanka), FIPFM (UK), FICIA
(Canada) - DGM - Region II 8. Mr P S L Kithsiri Perera, B.Com (Special) (Sri J'pura), AIB (Sri Lanka) DGM - Operations/Administrative Services 9. Mr V Kulendra Seyone,
DGM - Business Development 10. Mr Sarath Dias-Bandaranayake, FIB, Dip. In Mgt. - DGM - Audit & Inspection 11. Mr Tissa Nanayakkara, DGM - Seylan Card Centre
12. Mr K D W Rohana, AIB (Sri Lanka), Dip. In Business & Fin. Adm. (ICASL) - DGM - Region IV 13. Dr P Niranjan, PhD (North West - NY), MBA (IIU.EU), FSSM (UK),
FBMA (UK), FACOM (UK), FICIA (Canada), AIB (SL), MAAT (SL), AIPFM (UK), Dip.In Bus. Mgmt (India) - DGM - Region III 14. Mr S L A Azeez, AIB, FSCMA, FCMA (London) -
AGM - Compliance 15. Mr Ravi Dissanayake, AGM - Personal Assistant to DIR/GM/CEO 16. Mr Cyril Gamage, AGM - Private Banking 17. Mr Ranjith X Fonseka, Asso.
Dip. In Information Technology (Aus) - AGM - Information Technology (Projects) 18. Mr Sunanda Perera, B.Sc, MBCS, CITP - AGM - Information Technology (Operations)
36

Senior Management
19 20 21 22 23
24 25 26 27 28
29 30 31 32 33
34 35
19. Mr Hiran Amarasinghe, B.A (Hons) UK, FCCA (UK) - AGM - Treasury 20. Mr S Palihawadana, BSc - AGM / Chief Dealer 21. Mr R N Divulwewa, Post Grad. Ex. Dip.
In Bank Mgt. - AGM - Region I 22. Ms Rohini Weerakkody, AIB (Sri Lanka), Dip. In Bank Mgt. (IBSL), MBA (Huddersfield) - AGM - Operations 23. Mr T J Pathirage MBA
(Sri J'pura), B.Com, CISSP (USA), CISA (USA), CISM (USA), CCSE (USA), AIB, ISO 27001/BS7799, Lead Auditor (IRCA) - AGM - Information Systems Audit 24. Ms Shalini M
S Perera, ACIB (UK), MBA (Sri J"pura) - AGM - Corporate & Foreign Currency 25. Mr Chitral de Silva, Ex. Dip in Business Administration (University of Colombo) - AGM -
Development Banking 26. Mr Shafeek Samad, MBA - AGM - International 27. Mr Lalantha Kulatunga, AGM - Debt Restructuring Unit 28. Mr A R M Hannan, M.Sc. in
IT (Keele) - AGM - Information Technology (Administration) 29. Mr Richie Dias, PGEDBM (IBSL) - AGM - International Financial Services 30. Mr Suresh Amerasekera,
Advanced Diploma In Mgt. Accounting, (Awarded by The Chartered Institute of Mgnt. Accountants) - AGM - Region V 31. Mr Nandalal R Ranasinghe, Diploma in Bank
Management - AGM - Treasury & International Audit 32. Mr Delvin Pereira MBA (Sydney) - AGM - Region IV 33. Mr Christie Nanayakkara, AIB (Sri Lanka), MBA
(University of Western Sydney) - AGM - Credit Review (Corporate Banking) 34. Mr A A Emmanuel, B.Sc, Dip. In Business Admn. AGM - Region III
35. Mr Kamal Deshapriya, ACMI (UK), DIP MASS COM (Sri J'pura) - AGM - Sales
SEYLAN BANK - Annual Report 2006
37

Corporate Governance
SEYLAN BANK - Annual Report 2006
The Board of Directors of Seylan Bank is committed to
adopting sound corporate governance practices within the
organization with the ultimate goal of maximizing shareholder
value whilst safeguarding the interests of its other
stakeholders.
In order to consolidate our position as a strong and
indigenous bank, the Bank has adopted several measures
towards achieving good corporate governance, comprising of
success-oriented corporate management and responsible
corporate monitoring.
Board of Directors and Delegation of Authority
The Board is headed by the Chairman and comprises of
twelve Directors of whom four are Non-Executive Directors.
Their collective experience in different spheres of expertise
enables them to provide the necessary stewardship to the
organization by setting out strategies to meet the overall
objectives of the company of improving performance,
profitability and growth, meeting corporate social
responsibilities and enhancing value to Shareholders and
other Stakeholders.
The Board is accountable to the shareholders for the Bank’s
overall performance and its responsibilities include :-
• Providing strategic direction by the formulation of
strategies and business policies and ensuring effective
implementation of same.
• The appointment of the CEO and succession planning of
corporate management
• Ensuring adherence to legal and ethical standards.
• Reviewing and strengthening internal control, risk
management and audit systems
• Approval of credit facilities exceeding the delegated
limits of the executive Credit Committee
• Ensuring internal and external information flows and
appropriate financial reporting
• Approving annual budgets and corporate plan and
approving annual and interim financial statements.
The Board meets regularly and convenes additional meetings
whenever necessary. The Board met six times in 2006.
In addition the Board has formed several sub committees
focusing attention on specific areas of review with Executive
Directors possessing expertise in their respective fields being
assigned to head each area. Monthly meetings are also held
for Recoveries & Litigation and Special Collections,
Information Technology and Marketing with the respective
designated Executive Directors and Senior Management with
the participation of the Deputy Chairman and CEO.
The Board seeks independent professional advice on any
matter whenever required. The Board allocates adequate
time to matters of the Board and the Bank. In addition to the
Board meetings and other monthly meetings and
sub-committee meetings, matters are referred to the
directors also by circulation. The Board sub-committees
include the Audit Committee, Credit Committee and the Risk
Management Committee.
Chairman and the Chief Executive Officer
As an essential feature of corporate governance, the
functions of the CEO have been separated from those of the
Chairman. The CEO’s functions are carried out by
Director/General Manager of the Bank. He heads the senior
management team and is directly responsible to the Board of
Directors. His main functions and responsibilities include the
overall management and operations of the Bank. He also
heads the Bank’s Treasury Committee and the ALCO. The
Treasury Committee monitors the current market conditions
and liquidity position whilst ALCO does the Assets and
Liability Management process. The Director/GM/CEO also
chairs the Credit Policy Committee, which reviews the credit
policy and guidelines of the Bank, quality of the portfolio,
develops strategies for recovery and manages credit risks.
Control Systems & Board Sub Committees
The two major internal control systems include the internal
audit and information system audit. In addition to the
External Auditor, the Bank also obtains the services of an
internal Audit Department, which reports to the Audit
Committee of the Bank.
Audit Committee
The Audit Committee comprising of three non-executive
Directors functions as an independent unit and directly
reports to the Board of Directors. The Deputy General
Manager Internal Audit acts as the secretary to the Audit
Committee and submits Quarterly Compliance Reports to the
Committee for review. The external auditors also attend this
meeting and therefore have direct access to the Audit
Committee to report on any matters independently to the
Board. The CEO and members from Senior Management also
38

Corporate Governance
attend this meeting by invitation as and when required. The
director overlooking compliance attends the meetings by
invitation. The report of the Audit Committee is given on
page 56 of the Annual Report.
Credit Committee
The authority over the function of credit administration has
been delegated to the levels of management, from the
Director/GM/CEO down to the level of Branch Managers with
limits being stipulated in accordance with the level of
authority. The Credit Committee of the Board of Directors
comprising of three Executive Directors approves facilities in
excess of the General Manager’s delegated authority limits.
Facilities approved by the Committee are also submitted to
the Board for review. Facilities exceeding Credit Committee’s
limits are referred to the Board of Directors for approval.
Risk Management Committee
As part of good governance and also Basel II compliance, an
integrated Risk Management Committee was established
headed by the director overlooking compliance and
comprising of the Director/General Manager and five
members of the senior management. The Committee
formulates strategies and policies for managing risks and is
also responsible for establishing adequate systems and
control to ensure that overall risks remain within acceptable
levels. It is also responsible for establishing risk management
units in key areas viz. credit, operational and market;
development of in-house skills for effective risk management,
provision of expertise from external sources and ensuring
that the risk management units employ sound techniques to
limit and manage different types of risk. The committee
reports to the Board of Directors.
Compliance
The Bank has laid down procedures to be followed to ensure
compliance with applicable laws and regulations. The Bank
has strengthened its compliance function with the
establishment of a separate department headed by a Director
with extensive experience in bank supervision. It is
responsible for ensuring the Bank’s compliance with banking
regulations as well as requirements under new statutes such
as the Prevention of Money Laundering Act, Suppression of
Terrorist Financing Act and Financial Transactions Reporting
Act. Monthly, quarterly and half yearly compliance reports are
forwarded to the Central Bank confirming the Bank’s
compliance with banking regulations. The Board is apprised of
the status of compliance by the Bank on a regular basis
whilst a detailed compliance report is submitted to the Board
every quarter.
Corporate Disclosure Policy
The Bank has over the years, continuously published its
Quarterly Financial Statements supplemented with the
necessary explanatory notes and observations for the
information of its shareholders and other stakeholders. Any
other financial and non-financial information, which is price
sensitive or warrants the shareholders’ and stakeholders’
attention and consideration, is promptly disclosed to the
public.
Relations with shareholders
The Board encourages the active participation of the
shareholders at its Annual/Extraordinary General Meetings.
Shareholders are free to communicate with the Bank and
their requirements and queries are promptly addressed.
Suggestions made by them are implemented whenever
possible.
SEYLAN BANK - Annual Report 2006
39

Investors’ Information
Direct and indirect holdings of the Directors as at 31st December 2006
31.12.2006 31.12.2005 Shares/debentures
Dr J L B Kotelawala 529,525 529,525 Ordinary Voting Shares
37,300 37,300 Preference Shares
Dr J L B Kotelawala (joint with Hon. S P C Kotelawala) 181,500 181,500 Ordinary Voting Shares
Mr R Renganathan 48,600 28,600 Ordinary Voting Shares
Mrs S P C Kotelawala 6,554 6,554 Ordinary Voting Shares
6,554 - Ordinary Non-Voting Shares
10,000 10,000 Debentures 2002/2007 -
(Annual Interest)
5,000 - Debentures 2006/2011 -
(Annual Interest)
Mr A M Pasqual 4,000 3,000 Ordinary Voting Shares
33,000 - Ordinary Non-Voting Shares
2,100 - Debentures 2002/2007 -
(Monthly Interest)
*Mrs S D Pasqual 1,876 1,876 Ordinary Voting Shares
1,876 - Ordinary Non-Voting Shares
400 - Debentures 2002/2007 -
(Monthly Interest)
2,000 - Debentures 2006/2011 -
(Annual Interest)
Mr A D Jegasothy 8,369 8,369 Ordinary Voting Shares
Mr A D Jegasothy (joint with Mrs C F R Samaranayake) 8,369 - Ordinary Non-Voting Shares
*Mrs C F R Samaranayake 4,204 4,204 Ordinary Voting Shares
*Mrs C F R Samaranayake (joint with S J Samaranayake) 4,325 4,325 Ordinary Voting Shares
Ms M Sabaratnam 150 150 Ordinary Voting Shares
150 - Ordinary Non-Voting Shares
Mr S K M Perera 1,000 1,000 Ordinary Voting Shares
1,000 - Ordinary Non-Voting Shares
Dr P R Anthonis 21,800 21,800 Ordinary Voting Shares
Mr S C O De Livera 4,537 4,537 Ordinary Voting Shares
4,537 - Ordinary Non-Voting Shares
Mr J E P A De Silva (resigned w.e.f. 11.05.2007) 5,445 5,445 Ordinary Voting Shares
5,445 - Ordinary Non-Voting Shares
Mr K A S Jayatissa 100 100 Ordinary Voting Shares
Mr P T Sirisena 1,000 - Ordinary Voting Shares
6,957 - Ordinary Non-Voting Shares
(* indirect holdings)
SEYLAN BANK - Annual Report 2006
40

Investors’ Information
2006 2005
Ordinary Voting Shares No. of Shares % No. of Shares %
1. Dr T Senthilverl 2,178,000 5.00 2,178,000 5.00
2. Dollar Distribution (Pvt) Ltd 2,178,000 5.00 2,178,000 5.00
3. Seyfest (Private) Limited 2,177,996 5.00 2,177,996 5.00
4. Seyshop (Private) Limited 2,177,900 5.00 2,177,900 5.00
5. Seybest (Private) Limited 2,177,900 5.00 2,177,900 5.00
6. Sesot (Private) Limited 2,177,900 5.00 2,177,900 5.00
7. Esots (Private) Limited 2,160,857 4.96 2,160,857 4.96
8. Ceylinco Securities & Financial Services Ltd. 2,140,226 4.91 2,140,226 4.91
9. Ceylinco Insurance Co. Ltd. 1,756,460 4.03 1,756,460 4.03
10. Ceylinco Limited 1,680,896 3.86 1,680,896 3.86
11. National Savings Bank 1,510,900 3.47 1,510,900 3.47
12. The Finance Company Ltd. 1,473,223 3.38 1,473,223 3.38
13. Ceylinco Developers Ltd 1,394,400 3.20 1,394,400 3.20
14. Softlogic Holdings (Pvt) Ltd 1,200,000 2.75 1,200,000 2.75
15. Sotse (Pvt) Ltd 1,002,331 2.30 1,002,331 2.30
16. Lanka Milk Foods (CWE) Limited 769,380 1.77 769,380 1.77
17. Mr M M Udeshi 677,452 1.55 576,452 1.32
18. Mr R K Seenivasagam 538,800 1.23 539,100 1.24
19. Dr J L B Kotelawala 529,525 1.22 529,525 1.22
20. Mr S K Sivakumar 498,700 1.14 498,700 1.14
Sub Total 30,400,846 69.77 30,300,146 69.56
Balance Shares held by other voting shareholders 13,159,154 30.23 13,259,854 30.44
(8,007 shareholders) (8,008 shareholders)
Total Voting shares 43,560,000 100.00 43,560,000 100.00
2006 2005
Ordinary Non-Voting Shares No. of Shares % No. of Shares %
1. Mr S V Somasunderam 9,418,800 7.62 1,706,900 4.27
2. Elgin Investments Limited 5,150,800 4.16 1,100,500 2.75
3. National Insurance Corporation Ltd A/c No.2 4,600,000 3.72 4,306,600 10.77
4. National Savings Bank 4,540,900 3.67 - -
5. Seylan Bank Ltd/Asia Fort Asset Management (Pvt) Ltd 4,343,500 3.51 - -
6. Mr T D R Karunaratne 4,000,000 3.23 - -
7. Janashakthi Insurance Co. Ltd 4,000,000 3.23 - -
8. Ceylinco Securities & Financial Services Ltd 3,994,910 3.23 - -
9. Mrs P N Bhatt 3,833,828 3.10 1,018,300 2.54
10. Ceylinco Insurance Co. Ltd A/C No. 1 (Life Fund) 3,283,962 2.65 - -
11. Softlogic Holdings (Pvt) Ltd 3,200,000 2.58 - -
12. Akbar Brothers Ltd A/c No.1 2,509,900 2.03 1,241,200 3.10
13. Mrs D P M Karunaratne 2,178,000 1.76 - -
14. Ceylinco Insurance Co. Ltd 1,756,460 1.42 - -
15. Mrs E B H A Perera 1,555,100 1.25 777,900 1.94
16. Bank of Ceylon A/c Ceybank Unit Trust 1,430,200 1.15 640,900 1.60
17. Mr H L Rikhye 1,392,900 1.12 - -
18. Sinhaputhra Finance Ltd 1,108,000 0.89 - -
19. Employees’ Trust Fund Board 1,099,400 0.88 478,900 1.19
20. Hatton National Bank Ltd – A/c No. 3 1,050,000 0.84 419,500 1.05
Sub Total 64,446,660 52.04 11,690,700 29.22
Balance Shares held by other Non-voting shareholders 59,113,340 47.96 20,314,000 70.78
(5,803 shareholders)
Total Non-voting shares 123,560,000 100.00 40,000,000 100.00
SEYLAN BANK - Annual Report 2006
41

Investors’ Information
Analysis of the Distribution of Shareholders as at 31st December 2006
ORDINARY (VOTING) SHARES
ORDINARY (NON-VOTING) SHARES
Range of Shareholding Percentage Percentage
No. of No. of (%) of No. of No. of (%) of
Shareholders Shares Shareholding Shareholders Shares Shareholding
1 – 1,000 6,346 1,626,830 3.74 2,653 1,339,712 1.09
1,001 – 5,000 1,305 2,835,975 6.51 1,838 5,054,302 4.09
5,001 – 10,000 171 1,244,679 2.86 538 4,182,682 3.39
10,001 – 50,000 150 2,977,405 6.84 580 12,588,140 10.19
50,001 – 100,000 21 1,459,571 3.35 98 7,172,423 5.80
100,001 – 500,000 15 3,513,394 8.07 80 16,423,203 13.29
500,001 – 1,000,000 4 2,515,157 5.77 13 9,287,190 7.52
1,000,001 & Above 15 27,386,989 62.87 23 67,512,348 54.64
TOTAL 8,027 43,560,000 100.00 5,823 123,560,000 100.00
Resident/Non Resident
Resident 7,951 43,332,250 99.48 5,766 114,714,335 92.84
Non Resident 76 227,750 0.52 57 8,845,665 7.16
Individuals/Institutions
Individuals 7,741 13,216,921 30.34 5,568 60,548,689 49.00
Companies 286 30,343,079 69.66 255 63,011,311 51.00
ORDINARY SHARES (QUOTED)
Voting (SEYB-N)
Non-Voting (SEYB-X)
2006 2005 2006 2005
No. of shares issued 43,560,000 43,560,000 123,560,000 40,000,000
Dividends (per share/%) Rs. 1.50 20% Rs. 1.50 20%
per share
per share
Share prices
Highest Rs. 50.00 58.50 19.50 25.50
Lowest Rs. 30.00 29.50 09.25 15.25
As at 31st December Rs. 35.00 36.75 09.75 16.25
Percentage of Public Holdings 74.92% 74.86% 92.27% 99.99%
DEBENTURES (QUOTED)
Debentures 2001/2006
(SEYB D41, D42 & D43) Monthly Interest Annual Interest Floating
(15%) (16%) rate of interest
2006 2005 2006 2005 2006 2005
SEYLAN BANK - Annual Report 2006
No. of Debentures issued 803,900 3,703,250 883,450
Debenture Prices
Highest Rs. 99.00 105.00 99.00 105.00 Not traded 100.00
Lowest Rs. 95.00 96.00 99.00 98.00 during the 100.00
As at 31st December Rs. Matured on 96.00 Matured on 105.00 year 2006 100.00
23/05/2006 23/05/2006 Matured on
23/05/2006
42

Investors’ Information
Debentures 2003/2008
(Listed on CSE in January 2004)
(SEYB D64, D65 & D66) Monthly Interest Annual Interest Floating
(9%) (10%) rate of interest
2006 2005 2006 2005 2006 2005
No. of Debentures issued 1,369,250 13,368,000 262,750
Debenture Prices
Highest Rs. 88.00 98.00 90.00 98.00 Not traded
Lowest Rs. 83.64 95.00 81.00 85.54 during the
As at 31st December Rs. 88.00 98.00 89.98 85.54 years 2005 &
2006
Debentures 2006/2011
(Listed on CSE in July 2006)
SEYB D86, D87 & D88) Monthly Interest Annual Interest Floating
(13%) (13.5%) rate of interest
2006 2005 2006 2005 2006 2005
No. of Debentures issued 7,646,400 4,620,800 305,950
Debenture Prices
Highest Rs. 99.65 - Not - Not -
Lowest Rs. 98.50 - traded - traded -
As at 31st December Rs. 99.65 - in 2006 - in 2006 -
Current
Previous
Period Comparative Period
31.12.2006 31.12.2005
Interest rate of comparable
Government security 13.55% 11.15%
Debt / Equity ratio 0.76 0.86
Interest Cover 4.09 3.50
Quick asset ratio 0.83 0.83
Interest Yield as at date of last trade
2003/2008 Issue
Annual Interest (05/12/2006)/(10/11/2005) 11.11% 11.69%
Monthly Interest ( * )/(26/09/2005) * 9.87%
Floating Interest ( * )/(30/06/2005) * 11.81%
2006/2011 Issue
Annual Interest * * -
Monthly Interest (24/11/2006) 13.85% -
Floating Interest * * -
Yield to maturity of trade done on
2003/2008 Issue
Annual Interest (05/12/2006)/(10/11/2005) 16.05% 16.20%
Monthly Interest ( * )/(26/09/2005) * 10.73%
Floating Interest ( * )/(30/06/2005) * 11.75%
2006/2011 Issue
Annual Interest * * -
Monthly Interest (24/11/2006) 13.10% -
Floating Interest * * -
* No trading during the period
SEYLAN BANK - Annual Report 2006
43

Sharing Growth
Social Contribution

Our Human Capital
Our people continue to excel in their biggest strength –
building relationships. The Bank’s success to a great extent
has been this unwavering commitment. The Bank will have a
firm foundation to achieve the goals, mission and vision that
remain integral to its success.
We remain very proud of the Seylan Team who has displayed
a great degree of professionalism, loyalty, motivation and
dynamism in meeting and exceeding the goals we set for
ourselves, sometimes under very challenging circumstances.
This truly exemplifies the grit and determination that
permeates the positives of teamwork into everything we do.
We remain one of the few ISO 9001:2000 certified HR
departments in the Banking & Finance industry. Having been
re-certified this year, we are working on integrating our
processes such as remunerations, appraisals, recruitment
and promotion mechanisms into a highly IT orientated
environment. In our present business sphere, automation is
the focal point of securing a competitive edge and hence the
need to proceed in this vein. Training was also permeated to
all staff in the bank with an average of 20 hours per
employee via 280 Internal, and 121 local programmes and 43
overseas programmes.
The year has seen a rising need to concentrate and focus
more on human capital development, thus spawning a
specialised Human Resource Development team within the
contours of HRM to facilitate this requirement. This has also
been emphasised further with the theme for next year, the
Bank achieving the status of ‘Best in Customer Service’. We
have already begun training and development programmes
for every single member of the Seylan Team, a process that
pervades from top to bottom to ensure that the Team works
on the united platform of customer service excellence.
We have also infused the rudiments of IT into our HR
functions, with Phase 1 already complete and Phase 2
implementation in progress, due to be completed by mid
2007. This makes HR information more accessible for our
team, hence optimizing the speed of delivery. Phase 2 will
bring HR functions closer to a paperless environment with all
details including staff personnel files securely stored in digital
format.
The Performance appraisal system has been changed to that
of a bi-annual evaluation, which is currently in the
implementation phase. Due to the prevailing staff strength,
the pragmatic difficulties would deem this implementation as
1
3
SEYLAN BANK - Annual Report 2006
2
1 The Vavuniya Branch Cricket Team emerged champions at
the Annual Cricket Tournament 2006 organised by Ceylinco
General.
2 The award winners at the Annual Awards Ceremony 2006
with Mr. Ajitha Pasqual, Director/General Manager/Chief
Executive and the members of the Senior Management.
3, 4 At the Annual Athletic Meet of Seylan Bank
46

Our Human Capital
an arduous task, however, the infusion of a digitalized
appraisal system would bury any such dogma and see the
smooth functioning of staff evaluations.
Our benefits to staff continue to be added on as we feel that
a contented workforce will always be more productive and
efficient. In addition to a very comprehensive medical
scheme and insurance cover, we have also paid an additional
bonus to the staff at the end of December 2006 as an
incentive over and above the regular allowances and
bonuses. Staff trips, sports days, the Inter-departmental quiz,
Master mind competitions and unstinted support for those
team members who pursue extracurricular activities continue
to be ingrained into our operations. Sportsmen and women
are encouraged to excel and Seylan takes every feasible step
to harness/nurture such skills to benefit the individual at
domestic and national levels. In fact, Seylan has the highest
number of cricketers from the national team under its
umbrella, including its skipper. This is echoed in rugby,
badminton, table tennis, basketball and a variety of other
sporting fields.
Age Analysis of Staff
No of Participants in Traning Programmes-2006
Staff Training Programmes-2006
2000
1750
1500
1250
1000
750
500
250
0
25<
26-35
36-45
46-55
55>
In-house Training Programme (8,811)
Local (554)
Foreign (86)
In-house Training Programme (63%)
Local (27%)
Foreign (10%)
Grade Analysis of Staff
2400
2100
1800
1500
1200
900
4
600
300
0
3, 4 At the Annual Athletic Meet of Seylan Bank
Chief Managers &
Senior Managers
Managers &
Asst. Managers
Executive I & II
BKA I-III
Others
SEYLAN BANK - Annual Report 2006
47

Corporate Social Responsibility
Seylan Bank’s business philosophy has always been one of
care. Care born out of a need to see poverty dissipate from a
country that has potential to grow; care born out of a
conviction that Sri Lankans have the skills and knowledge to
contribute towards sustainability with the right examples to
steer them on the said path and care to see that people are
empowered to lead fruitful and contented lives. Our CSR
platform therefore is completely based on sustainability and
rebuilding lives and livelihoods to ensure that a sustainable
and empowering environment is created for people who
need a helping hand to gain that empowerment. While the
bank in itself identifies earmarked projects during the year,
the branches too identify individuals that do require
assistance and feed that information to the Sarana Fund
through which the Bank contributes to the least privileged in
society.
Re-awakening Konduruwawa
Tight rope walking was the method used by the villagers of
Konduruwawa, a little village off Polonnaruwa to cross the
Yoda Ela. Young and old pursued this mode to cross the
waters even though it was dangerous and as such was
effectively decreasing any economic activity between this
agricultural village and any others in the vicinity. Spurred by a
media story, Seylan Bank, guided by Chairman Deshamanya
Dr. Lalith Kotelawala took up the mantle of constructing a
bridge for the village, aptly named ‘A bridge to the future’ as
it will literally transform the villagers’ lives into one where not
only can they get about their day to day affairs with ease, but
will also develop their economy due to the ease of transport.
The next phase of this village Re-awakening will be the
construction of houses to some of the 25 families who do not
own a home and concurrently, to assist the villagers in their
agricultural activities so that they will eventually become self
sufficient.
Repatriating Sri Lankan Housemaids
On an initiative of the Chairman, Seylan Bank chartered a
special flight in September 2006 to repatriate 308
housemaids in strife torn Lebanon, who remained stranded
with no funds or hope of ever coming back to Sri Lanka. This
repatriation was conducted in collaboration with the
International Organisation for Migration, the Sri Lankan
Foreign Ministry and the Sri Lankan Embassy in Lebanon.
IT for Estate Children
With IT being an integral part of development, on an initiative
of the Chairman, Seylan donated ten computers to the
1
2
SEYLAN BANK - Annual Report 2006
3
1 Staff members of the Transport Department visited the
Home for Disabled children at Preethipura and offered
refreshments to the inmates on Vesak Poya Day.
2 Mrs. S P C Kotelawala handing over the cheque to
Mrs. Nilanthi Jinasena, Board Member – the Resource
Development Committee of the Ceylon School for the Deaf &
Blind.
3 On the occasion of the Birthday of our Chairman,
Deshamanya Dr. Lalith Kotelawala, Hatton Branch supplied
mid day meals to all inmates of D K W Elder’s Home, Hatton.
48

Corporate Social Responsibility
Plantation Education and Cultural Development Association in
Deraniyagala. This gives the lesser fortunate segments of
students within the plantations, the opportunity to gain
knowledge and skills in IT creating an enabling environment
for future career prospects.
Financial Assistance for the Deaf & Blind
On an initiative mooted by the Card Centre, Seylan donated
0.1% of the turnover on credit cards to provide education,
food, accommodation, healthcare and recreational facilities
to over 600 students who are either visually or hearing
impaired. We do believe that if this segment of society can
be empowered with the right impetus and by facilitating
better equipment and living standards, the hearing and
visually impaired can be integrated into society smoothly.
Honing the Creative : All Island Children’s art Competition
Skills of Children Kite Competition
7th Scout Jamboree and 4th SAF
Scout Friendship Camp
The Bank sponsored the All Island Children’s Art Competition
in preparation for the 21st Children’s Peace Drawing
Competition in Hiroshima Japan and the Kite Competition on
Mount Lavinia Beach organised by the Lion’s Club. We also
partnered the Sri Lanka Scout Association to host the 7th
National Scout Jaboree and the 4th SAF Friendship Camp in
Nuwara Eliya. We firmly believe that creative talents and
extracurricular activities must be encouraged and honed to
inspire children to become more holistic individuals who are
able to take on the challenges of the future.
4 5
6 7
Seylan Bank sponsored the return of 300 housemaids by a specially
chartered flight, during the crisis in Lebanon.
4 Our Chairman Deshamanaya Dr. Lalith Kotelawala was
honoured “The Most Outstanding Social Worker of the Year
Award” at the SLIM-ACNielsen “Power of People” Awards
2006.
5 Mrs. Leonie Seneviratne, Senior Deputy General Manager
along with the Members of Senior Management of Seylan
Bank receiving one of the affected housemaids arriving at
the Colombo Airport.
Seylan Bank sponsored “A Bridge to the future” for the villagers of
Konduruwawa, a remote village situated in Diyabeduma, Polonnaruwa.
6 Mr Ajita Pasqual, Director/General Manager/Chief Executive
addressing the villagers at the ceremony conducted to
commence the construction of the bridge.
7 The new bridge was constructed at this site.
SEYLAN BANK - Annual Report 2006
49

...

Enjoying Growth
Financial Reports

Report of the Directors
The Directors present their Report for the year ended 31st
December, 2006 and the Audited Accounts of the Company as
at that date.
Review of the Year
The Chairman’s Statement on pages 6 - 8 gives an overview of
the Bank’s performance and the economic outlook whilst the
General Manager/Chief Executive’s report on pages 9 - 15 gives
a detailed description of the operations of the Bank and
important events which occurred during the year under review.
Both reports form an integral part of the Directors’ report.
Principal Activity
The principal activity of the Company is commercial banking.
Rs.’000
2006 2005
Profit before taxation 1,663,948 1,213,997
Less: Taxation 756,723 393,291
Profit after taxation 907,225 820,706
Attributable to Minority Interest (58,481) (43,367)
Net profit attributable to Shareholders 848,744 777,339
Retained profit brought forward
after dividend 1,964,033 908,938
Profit available for appropriation 2,812,777 1,686,277
Transfer to Reserve Fund (46,019) (34,392)
Other Transfers 368,936 649,344
Balance carried forward 3,135,694 2,301,229
SEYLAN BANK - Annual Report 2006
Subsidiaries and their Principal Activities
Seylan Merchant Bank Ltd - Merchant Banking.
Ceylinco Seylan
Developments Ltd
- Property Development
Seylan Bank Asset
Management Ltd
- Dealing in Government
Securities.
SMB Money Brokers (Pvt) Ltd - Money Market Activities
SMB Real Estate Ltd - Real Estate and Property
Development.
Seylan Merchant Leasing Ltd - Leasing
SMB Securities (Pvt) Ltd - Equity & debt trading activities
Branch Network & Expansion
As at 31st December 2006, the Bank had 93 branches and 23
extension offices totaling to 116 in operation, a list of which is
given on pages 110 - 113 of the Annual Report. The Bank also
has 83 student savings centres as at end 2006.
Statement of Income
The following is a summary of the consolidated financial results
of the operations of the Company during the year ended 31st
December 2006.
Taxation
Provision for taxation has been computed at the rates given in
Note 8 to the financial statements.
Dividends
Preference Dividend
The Directors recommend the payment of a Preference
dividend of Rs.1.14 per share to the Preference shareholders
registered with the Bank as at the entitlement date for the year
ended 31st December 2006. The dividend rate is a predetermined
rate as per the Prospectus to the Issue viz. one
percentage point over the one year Weighted Average Treasury
Bill rate at the primary auctions held during March of the
preceding year i.e. March, 2006. The Preference Dividend is
payable on 26th June 2007. The Bank paid a preference
dividend of 87 cents per share for the year 2005.
Ordinary Dividend
The Directors recommend the payment of a First and Final
Ordinary Dividend of Rs.1.50 per share to the ordinary
(voting and non-voting) share holders, for the year ended
31st December 2006 payable on 3rd July 2007. The Bank paid a
first and final dividend of Rs.2.00 per share for the year 2005.
Capital Expenditure
The total capital expenditure incurred on the acquisition of
property, plant and equipment during the year amounted to
Rs.581,360,160/- details of which are given in Note 25 to the
Accounts.
52

Report of the Directors
Property, Plant and Equipment
The details of the property, plant and equipment are given in
Note 25 to the Accounts.
Donations
During the year, the Company made donations amounting to
Rs.34,432,389/- (Donations made in 2005 amounted to Rs.
76,778,966).
Share Capital
The Authorised Capital of the Bank as at 31st December 2006
was Rs.7,500,000,000/- divided into 350 million Ordinary (voting)
shares of Rs.10/- each, 100 million non-redeemable, noncumulative,
non-convertible and non-voting Preference shares
of Rs.10/- each and 300 million non-voting ordinary shares of
Rs.10/- each.
The total issued and fully paid up capital as at 31st December
2006 was Rs.1,705,101,000/- consisting of 43,560,000 ordinary
(voting) shares of Rs.10/- each, 3,390,100 non-redeemable, noncumulative,
non-convertible and non-voting Preference shares
of Rs.10/- each, and 123,560,000 non-voting ordinary shares of
Rs.10/ - each.
The Bank had a Rights Issue of 1:1 in May 2006 issuing
83,560,000 Non-voting Ordinary shares of Rs.10/- each at an
issue price of Rs.12/50 per share to both its Ordinary Voting and
Non-voting shareholders. The issue was fully subscribed and
closed on 24th May 2006. A sum of Rs.1,044,500,000/- was
raised from the Issue.
Redemptions as at 31st December 2006
The Bank had redeemed Rs.591,975,000/- from and out of the
Rs.600 million 5 year Quoted Unsecured Subordinated
Redeemable Debentures issued in 1998 (1998/2003),
Rs.394,885,000/- from and out of the Rs.400 million 5 year
Quoted Unsecured Subordinated Redeemable Debentures
issued in 1999 (1999/2004) and Rs.513,820,000/- from and out of
the Rs.539.06 million 5 year Quoted Unsecured Subordinated
Redeemable Debentures issued in 2001 (2001/2006). Total
debentures outstanding as at 31st December 2006 from the
above issues amounted to Rs.38,380,000/-.
Debentures issued in 2006
In July 2006 the Bank concluded a public quoted issue of
12,573,150 Unsecured Subordinated Redeemable five-year
Debentures of Rs.100/- each amounting to Rs. 1,257,315,000/-
to meet capital adequacy requirements.
The Bank also issued Unsecured Subordinated Redeemable 5-6
year Debentures of Rs.162.25 million under a private placement
during the period November to December 2006 with the
objective of meeting the capital adequacy requirements.
Investors’ Information
Information including earnings, profitability, dividend, net assets
and market value per share is given under Financial Highlights
appearing on page 2 of the Annual Report. Information
pertaining to share prices (both voting and non-voting) and
debenture prices is given on pages 42 & 43 of the Annual
Report.
Shareholdings
As at 31st December 2006, there were 8,027 and 5,823
registered ordinary (voting) and ordinary (non-voting)
shareholders and 988 non-redeemable, non-cumulative, nonconvertible
and non-voting Preference shareholders respectively
of the Bank. An analysis of the distribution of the ordinary voting
and non-voting shareholders are given on page 42 of the Annual
report. The twenty largest Ordinary Voting and Non-voting
shareholders of the Bank are also given on page 41 of the
Annual Report.
Debt Capital
The Bank has 15,000,000 Unsecured Subordinated Redeemable
Five Year Debentures 2003/2008 and 12,573,150 Unsecured
Subordinated Redeemable Five Year Debentures 2006/2011 listed
on the Colombo Stock Exchange. Details on both these series of
debentures are given on page 43 of the Annual Report.
Directorate
The Board of Directors of the Bank as at 31st December 2006
were as follows :
1. Dr J L B Kotelawala 7. Mr S K M Perera
2. Mr R Renganathan 8. Dr P R Anthonis
3. Hon. S P C Kotelawala 9. Mr S C O De Livera
4. Mr A M Pasqual 10. Mr J E P A De Silva
5. Mr A D Jegasothy 11. Mr K A S Jayatissa
6. Ms M Sabaratnam 12. Mr P T Sirisena
Mr J E P A De Silva resigned from the Board of Directors on 11th
May 2007. Mr. J G S De Silva was appointed to the Board of
Directors of the Bank with effect from the said date.
In terms of Article 87 of the Articles of Association of the Bank,
Mr J G S De Silva retires as a director at the Annual General
Meeting and being eligible, offers himself for re-election.
SEYLAN BANK - Annual Report 2006
53

Report of the Directors
In terms of Article 95 of the Articles of Association of the
Company, Directors, Mrs S P C Kotelawala and Mr A M Pasqual
retire by rotation at the Annual General Meeting and being
eligible offer themselves for re-election.
Mr S C O de Livera also retires by rotation in terms of the said
Article 95 and offers himself for re-election. However, as Dr P R
Anthonis and Mr De Livera are over 70 years of age, special
Notices pursuant to Sections 145 & 211 of the Companies Act
No. 7 of 2007 have been received from Mr. S Palihawadana and
Mr M S M Saleem, Shareholders of the Company of their
intention to propose that Dr P R Anthonis and Mr S C O de Livera
respectively be re-elected and that the age limit specified in
Section 210 of the Companies Act shall not apply to the said
Directors.
Directors’ direct and indirect holdings of securities of the
Bank
Details of Directors’ direct and indirect shareholdings and
debenture holdings in the Bank are given on page 40 of the
Annual Report.
Directors Interest in Contracts
The Directors of the Company have no direct or indirect interest
in any contract or proposed contract of the Company, except
those specified in Note 40 to the Accounts, which have been
disclosed and declared at meetings of the Directors.
Corporate Governance
The Bank has put in place systems and procedures to ensure the
implementation of sound corporate governance principles. An
overview of such practices adopted within the Bank is given on
pages 38 & 39 of the Annual Report.
Audit Committee
The Audit Committee of the Bank comprises of three nonexecutive
Directors of the Bank with the Bank’s Deputy General
Manager, Audit & Inspection functioning as its Secretary.The
report of the Audit Committee is given on page 56 of the Annual
Report.
of affairs. The Directors are of the view that these financial
statements have been prepared in conformity with the Sri Lanka
Accounting Standards, the Companies Act No. 17 of 1982 and the
Banking Act No. 30 of 1988 as amended. The Directors are
accordingly satisfied that the financial statements presented
herein give a true and fair view of the state of affairs of the Bank
and the group as at 31st December 2006 and the profit for the
year then ended.
Statutory Payments
The Directors are satisfied that to the best of their knowledge
and belief, all statutory payments due to the government and to
the employees of the Bank have been made upto date.
Employees Share Owning Scheme
The Bank has in place several employee share owning trusts
established to provide an additional benefit to the employees at
the time of their retirement/resignation over and above their
gratuity entitlement. The trusts have acquired shares of the Bank
from time to time. All shares held by the trusts have been
purchased at the market price/s prevailing at the time.
Post Balance Sheet Events
No events have occurred after the balance sheet date which
would require adjustments to or disclosure in the Accounts,
other than those given in Note 39 to the Accounts.
Auditors
The retiring Auditors, M/s KPMG Ford, Rhodes, Thornton & Co.,
Chartered Accountants have signified their willingness to
continue in office and a resolution to re-appoint them as Auditors
and authorising the Directors to fix their remuneration will be
proposed at the Annual General Meeting.
Notice of Meeting
Notice of Meeting relating to the Twentieth Annual General
Meeting of the Bank is given on page 123 of the Annual Report.
BY ORDER OF THE BOARD
SEYLAN BANK - Annual Report 2006
Going Concern
The Directors are satisfied that the Bank has adequate resources
to continue its operations in the foreseeable future. The financial
statements of the Bank have accordingly been prepared on a
going concern basis.
Directors’ Responsibility for Financial Reporting
The Directors are responsible for the preparation of the financial
statements of the Bank to reflect a true and fair view of its state
(Mrs) M R S Gunasekara
Company Secretary
16th May 2007
54

Directors’ Responsibility for Financial Reporting
The Bank’s Financial Statements for the year 2006 prepared
and presented in this report are in conformity with the
requirements of the Sri Lanka Accounting Standards, the
Companies Act No. 17 of 1982, the Banking Act No. 30 of
1988 as amended. The Financial Statements reflect a true and
fair view of the state of affairs of the Group as at that date.
The Board of Directors has instituted an effective and
comprehensive system of Internal Control. This comprises
Internal Check, Internal Audit, Information Systems Audit and
the whole system of Financial and other controls required to
carry on the business of banking in an orderly manner,
safeguard its assets and secure as far practicable the
accuracy and reliability of the records.
The Bank’s Auditors, M/s KPMG Ford, Rhodes, Thornton & Co.
carry out reviews and test checks on effective internal
control, as they consider appropriate and necessary for
providing their opinion on the Financial Statements.
The Bank Supervision Department of the Central Bank of
Sri Lanka carries out periodical examinations to ensure
conformity to the provisions of the Banking Act and the
relevant guidelines arising therefrom.
M/s KPMG Ford, Rhodes, Thornton & Co. have examined the
Financial Statements made available together with all other
financial records and related information and expressed their
opinion which appears on page 57 of the Annual Report.
BY ORDER OF THE BOARD
(Mrs) M R S Gunasekara
Company Secretary
16th May 2007.
The Board of Directors oversees the Management
responsibility for financial reporting by their regular meetings
at which monthly Management Accounts are reviewed and
also through the Audit Committee.
SEYLAN BANK - Annual Report 2006
55

Audit Committee Report
The Audit Committee comprising of three non-executive
Directors of the Bank has conducted four quarterly meetings
during the year. The Deputy General Manager, Audit &
Inspection functions as the Secretary to the Committee
whereas the Assistant General Manager Information Systems
Audit reports on activities relating to Information Systems of
the Bank.
The External Auditors attend all Audit Committee Meetings.
Further, on invitation the Director/General Manager/CEO or
his representative takes part in the Audit committee Meeting
for the purpose of clarifying matters raised by the
Committee. Senior Manager-Finance too attended all
meetings for the purpose of reporting on the progress of the
implementation of Basel II requirements. From time to time,
as and when requirements arise, Heads of Ranges and Heads
of Human Resource Management are required to be present
at the meetings in order to obtain various clarifications.
Systems Audit Departments of the Bank as against the Audit
Plan approved for the year, on a quarterly basis. Taking all
these into consideration the committee makes its
recommendations to strengthen procedures and internal
control systems with a view to managing Operational Risk
and improving overall quality of the Bank
A summary of all above activities, highlighting any matters of
importance is submitted to the Board of Directors on a
quarterly basis.
The Audit Committee has recommended to the Board of
Directors that M/s KPMG Ford Rhodes, Thornton & Company,
Chartered Accountants be appointed as Auditors for the
financial year ending 31st December 2007, subject to the
approval of the shareholders at the next Annual General
Meeting.
The Internal Audit Department is in the process of further
improving on the Risk based Audit system which was
implemented in 2005.
The Committee reviews the progress of Audits and
Inspections carried out by the Internal Audit & Information
S C O de Livera
Chairman
Audit Committee
31st January 2007
SEYLAN BANK - Annual Report 2006
56

Auditors Report
REPORT OF THE AUDITORS
TO THE MEMBERS OF SEYLAN BANK LIMITED
We have audited the Balance Sheet of Seylan Bank Limited as at 31 December, 2006 and the Consolidated Balance Sheet of
the Company and it's Subsidiaries as at that date, and the related Statements of Income, Changes in Equity and Cash Flow for
the year then ended, together with the Accounting Policies and Notes exhibited on pages 58 to 107 of the annual report.
Respective Responsibilities of Directors & Auditors
The Directors are responsible for preparing and presenting these financial statements in accordance with the Sri Lanka
Accounting Standards. Our responsibility is to express an opinion on these financial statements based on our audit.
Basis of Opinion
We conducted our audit in accordance with the Sri Lanka Auditing Standards, which require that we plan and perform the
audit to obtain reasonable assurance about whether the said financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the said financial statements,
assessing the accounting principles used and significant estimates made by the directors, evaluating the overall presentation
of the financial statements, and determining whether the said financial statements are prepared and presented in accordance
with the Sri Lanka Accounting Standards. We have obtained all the information and explanations, which to the best of our
knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable
basis for our opinion.
Opinion
In our opinion, so far as appears from our examination, the Company maintained proper books of account for the year ended
31 December, 2006 and to the best of our information and according to the explanations given to us, the said Balance Sheet
and related Statements of Income, Changes in Equity and Cash Flow and the Accounting Policies and Notes thereto, which are
in agreement with the said books and have been prepared and presented in accordance with the Sri Lanka Accounting
Standards, provide the information required by the Companies Act, No.17 of 1982 and the Banking Act No. 30 of 1988, and give
a true and fair view of the Company’s state of affairs as at 31 December, 2006 and its Profit and Cash Flows for the year then
ended.
In our opinion, so far as appears from our examination, the Consolidated Balance Sheet and the related Statements of Income,
Changes in Equity and Cash Flow and the Accounting Policies and Notes thereto, have been properly prepared and presented
in accordance with the Companies Act No.17 of 1982 and the Banking Act No. 30 of 1988, and the Sri Lanka Accounting
Standards, and give a true and fair view of the Company’s state of affairs as at 31 December, 2006, and its Profit and Cash
Flows for the year then ended of the Company and it's Subsidiaries dealt with thereby, so far as concerns the members of the
company.
Directors’ Interest in Contracts with the Company
According to the information made available to us, the Directors of the Company were not directly or indirectly interested in
contracts with the Company during the year then ended 31 December, 2006 except as stated in Note 40 to these financial
statements.
CHARTERED ACCOUNTANTS
16th May 2007
Colombo.
SEYLAN BANK - Annual Report 2006
57

Income Statement
For the year ended 31st December Bank Bank Group Group
NOTE 2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Income 2 17,183,481 13,090,715 18,684,144 14,373,553
Interest Income 3 14,123,852 10,540,427 15,394,855 11,631,948
Interest Expenses 4 7,994,959 5,274,920 9,028,979 6,087,730
Net Interest Income 6,128,893 5,265,507 6,365,876 5,544,218
Other Income 5 3,059,629 2,550,288 3,289,289 2,741,605
9,188,522 7,815,795 9,655,165 8,285,823
Less: Operating Expenses 6
Personnel Costs 2,257,009 1,947,421 2,406,162 2,068,771
Premises, Equipment & Establishment Expenses 1,154,061 989,595 1,204,817 1,033,938
Fee and Commission Expenses 83,524 95,794 92,521 104,436
Provision for Staff Retirement Benefit 321,730 106,127 328,240 113,416
Other Overhead Expenses 1,611,756 1,297,553 1,739,796 1,398,759
Diminution/(Appreciation) in Value of Investments 58 - 18,054 400
Goodwill on Consolidation - - (263) (7,888)
5,428,138 4,436,490 5,789,327 4,711,832
Profit on Ordinary Activities before
Loan loss Provision & Tax 3,760,384 3,379,305 3,865,838 3,573,991
Less : Loan Losses & Provisions 7 1,684,495 2,012,065 1,728,143 2,051,147
Profit on Ordinary Activities Before Taxes 2,075,889 1,367,240 2,137,695 1,522,844
Less: Value Added Tax on Profit 469,007 306,207 473,747 308,847
Profit on Ordinary Activities After VAT before Tax 1,606,882 1,061,033 1,663,948 1,213,997
Less: Tax on Profits on Ordinary Activities 8 744,721 373,200 756,723 393,291
Profit on Ordinary Activities After Taxes 862,161 687,833 907,225 820,706
Attributable to Minority Interest - - 58,481 43,367
Net Profit Attributable to Shareholders of the Bank 862,161 687,833 848,744 777,339
Basic Earnings Per Share (Rs.) 9 6.49 8.20 6.39 9.27
The Significant Accounting policies and Notes to the Financial Statements which appear on pages 62 to 107 form an integral part
of these Financial Statements.
SEYLAN BANK - Annual Report 2006
58

Balance Sheet
As at 31st December Bank Bank Group Group
NOTE 2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
ASSETS
Cash and Short Term Funds 11 2,972,529 3,059,541 3,024,763 3,073,569
Balance with Central Bank of Sri Lanka 12 6,913,224 5,908,292 6,913,338 5,908,408
Treasury Bills and Bonds eligible for 13.1 4,534,735 2,543,087 5,820,220 4,298,988
rediscounting with Central Bank
Treasury Bonds maturing after one year 13.2 11,598,950 8,778,834 13,794,630 12,992,543
Government and other Securities held for dealing purpose 14 143 - 287 434
Placements with and loans to other Banks and
Finance Companies 15 1,448,038 2,211,922 1,473,016 2,221,431
Investment Securities 16 158,491 158,491 323,628 360,178
Securities purchased under resale agreements 1,300,000 729,379 1,337,283 774,855
Bills of Exchange 17 1,827,824 2,154,916 1,827,824 2,158,441
Loans and Advances 18 83,901,504 72,769,873 85,038,415 73,657,880
Lease Rentals Receivable not later than one year 19 2,782,481 2,358,023 3,824,375 3,269,220
Lease Rentals Receivable later than one year and
not later than five years 20 4,728,476 4,174,836 6,681,006 6,012,357
Lease Rentals Receivable later than five years 21 18,641 11,733 18,641 11,733
Investments in Subsidiary Companies 22 1,048,559 1,029,656 - -
Investment Properties 23 175,326 175,264 1,425,470 1,209,222
Group Balances Receivable 24 369,847 758,974 - -
Property Plant & Equipment 25 3,135,030 2,896,049 4,644,555 4,445,807
Other Assets 26 3,392,310 3,889,574 4,274,416 4,726,660
Intangible Assets 27 - - 28,286 (31,553)
Deferred Tax Assets 31.a - - 8,730 -
130,306,108 113,608,444 140,458,883 125,090,173
LIABILITIES
Deposits 28 100,078,809 85,833,954 100,078,809 85,833,954
Borrowings 29 4,080,171 4,772,176 7,566,992 7,849,008
Securities sold under re-purchase agreements 4,304,398 4,353,098 7,527,218 9,553,045
Group Balances Payable 30 485,510 470,153 - -
Current Taxation 817,297 105,420 911,700 207,622
Provision for Deferred Taxation 31.b 355,686 525,749 356,169 527,391
Other Liabilities 32 9,047,729 9,009,485 9,598,411 9,340,526
Debentures 33 4,782,635 3,912,130 5,331,023 4,608,235
123,952,235 108,982,165 131,370,322 117,919,781
Shareholders’ Funds
Share Capital 34 1,705,101 869,501 1,705,101 869,501
Statutory Reserve Fund 35 420,796 377,688 428,000 381,981
Reserves 36 4,227,976 3,379,090 5,335,012 4,480,392
6,353,873 4,626,279 7,468,113 5,731,874
Minority Interest 1,620,448 1,438,518
Shareholders’ Funds 6,353,873 4,626,279 9,088,561 7,170,392
Total Liabilities & Shareholders’ Funds 130,306,108 113,608,444 140,458,883 125,090,173
Commitments & Contingencies 37 22,924,450 22,942,795 22,947,626 23,379,831
The Significant Accounting policies and Notes to the Financial Statements which appear on pages 62 to 107 form an integral part
of these Financial Statements.
Approved and signed for and on behalf of the Board.
Deshamanya Dr. Lalith Kotelawala R. Renganathan A. Pasqual Mrs. S. Gunasekara
Chairman / Managing Director Jt Deputy Chairman Director/General Manager/ Company Secretary
Chief Executive
16th May 2007
Colombo
SEYLAN BANK - Annual Report 2006
59

Statement of Changes in Equity
For the year ended 31st December 2006
Bank
Rs. ’000
Share Reserve Retained Share Revaluation Other
Capital Fund Profits Premium Reserve Reserves Total
As at 01.01.2005 869,501 343,296 1,405,636 696,234 77,717 711,808 4,104,192
Net Profit attributable to the
shareholders of the Bank 687,833 687,833
Dividends - Note 10 (144,434) (144,434)
Debenture/Non Voting share
issue expenses (21,312) (21,312)
Transfers from retained profits 34,392 (34,392) -
Other transfers
As at 31.12.2005 869,501 377,688 1,914,643 674,922 77,717 711,808 4,626,279
As at 01.01.2006 869,501 377,688 1,914,643 674,922 77,717 711,808 4,626,279
Issue of Non Voting
Ordinary Shares 835,600 208,900 1,044,500
Net Profit attributable to the
shareholders of the Bank 862,161 862,161
Dividends - Note 10 (337,196) (337,196)
Debenture/Non Voting
share issue expenses (46,503) (46,503)
Transfers from/to retained profits 43,108 216,892 (260,000) -
Other transfers 204,632 204,632
As at 31.12.2006 1,705,101 420,796 2,656,500 837,319 282,349 451,808 6,353,873
For the year ended 31st December 2006
Group
Rs.’000.
Share Reserve Retained Share Revaluation Other Minority Total
Capital Fund Profits Premium Reserve Reserves Total Interest Equity
As at 01.01.2005 869,501 347,589 1,064,847 696,234 891,727 1,260,124 5,130,022 1,305,787 6,435,809
Net Profit attributable
to the shareholders 777,339 777,339 43,367 820,706
Dividends - Note 10 (155,909) (155,909) (11,376) (167,285)
Debenture/Non Voting
share issue expenses (21,312) (21,312) (21,312)
Transfers from
retained profits 34,392 (34,392) - -
Increase/decrease in
Share Premium - 7,506 7,506
Other transfers 649,344 (363,390) (284,220) 1,734 93,234 94,968
As at 31.12.2005 869,501 381,981 2,301,229 674,922 528,337 975,904 5,731,874 1,438,518 7,170,392
SEYLAN BANK - Annual Report 2006
As at 01.01.2006 869,501 381,981 2,301,229 674,922 528,337 975,904 5,731,874 1,438,518 7,170,392
Reversal of
negative goodwill 31,553 31,553 31,553
Value of deemed disposal 248 (1,635) (1,578) (2,965) 4,840 1,875
Balance Restated
as at 01/01/2006 869,501 381,981 2,333,030 674,922 526,702 974,326 5,760,462 1,443,358 7,203,820
Issue of Non Voting
Ordinary Shares 835,600 - - 208,900 - - 1,044,500 97,000 1,141,500
Net Profit attributable
to shareholders - - 848,744 - - - 848,744 58,481 907,225
Dividends - Note 10 - - (337,196) - - - (337,196) (18,698) (355,894)
Debenture/Non Voting
share issue expenses - - - (46,503) - - (46,503) - (46,503)
Transfers from/
to retained profits - 46,019 299,044 - (83,661) (260,000) 1,402 78,914 80,316
Transfers from/
to revaluation reserve - - - - - - - (80,316) (80,316)
Increase/decrease
in Share Premium - - - - - - - (1,113) (1,113)
Other transfers - - (7,928) - 204,632 - 196,704 42,822 239,526
As at 31.12.2006 1,705,101 428,000 3,135,694 837,319 647,673 714,326 7,468,113 1,620,448 9,088,561
60

Cash Flow Statement
For the year ended 31st December Bank Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cash flows from operating activities
Interest received 14,061,942 10,472,236 15,332,945 11,555,893
Fees and commission receipt 1,309,976 1,338,272 1,582,148 1,450,293
Interest payments (7,994,959) (5,274,920) (9,028,979) (6,087,730)
Exchange income 600,899 501,089 600,899 501,089
Receipt from other operating activities 1,063,740 626,994 1,063,740 626,994
Cash payments to employees and suppliers (4,958,645) (4,089,399) (5,243,321) (4,300,478)
Payments on other operating activities (83,524) (95,794) (92,521) (104,436)
Operating profit before changes in operating assets 3,999,429 3,478,478 4,214,911 3,641,626
Balances with Central Bank (1,004,932) (857,627) (1,004,929) (857,627)
(Increase)/decrease in operating assets :
Funds advanced to customers (12,305,671) (21,776,161) (13,260,358) (21,282,312)
(Increase)/decrease in operating liabilities :
Deposits from customers 14,007,484 17,962,776 14,007,484 17,962,776
Negotiable certificates of deposit 237,371 (429,975) 237,371 (429,975)
Cash generated from operations 4,933,681 (1,622,511) 4,194,479 (965,514)
Income taxes paid (129,363) (50,000) (163,220) (66,262)
Gratuity paid (53,636) (32,550) (53,887) (33,368)
Net cash from operating activities 4,750,682 (1,705,061) 3,977,372 (1,065,144)
Cash flows from investing activities
Investment in subsidiary shares (18,903) (80,379) - (16,934)
Proceeds from sale of subsidiary investment - 170,752 - 181,647
Dividends received 22,191 14,359 4,177 5,214
Treasury Bonds maturing after one year (2,823,046) (3,851,707) (805,017) (8,065,417)
Purchase of dealing securities (200) (105,902) (200) (106,735)
Proceeds from sale of dealing securities - 140,210 290 140,210
Purchase of non dealing securities - - (31,763) (87,497)
Proceeds from sale of non dealing securities - 50,000 50,317 104,694
Purchase of property , plant and equipment (581,360) (606,191) (630,476) (664,331)
Proceeds from sale of property , plant and equipment 25,812 43,389 73,456 58,167
Proceeds from sale of investment property 137,500 328,190 137,500 328,190
Purchase of investment property (62) - (216,248) (5)
Net cash from investing activities (3,238,068) (3,897,279) (1,417,964) (8,122,797)
Cash flows from financing activities
Increase/(decrease) Long Term Borrowings 870,505 691,500 722,788 503,390
Increase in Share Capital & Share Premium 1,044,500 - 1,141,500 -
Net increase/(decrease) in other borrowings (576,342) 6,272,287 (1,993,645) 6,486,069
Dividends paid (329,517) (159,388) (348,694) (170,683)
Share/debenture issue expenses (46,503) (21,312) (46,503) (21,312)
Pre operational expenses - - - -
Net cash from financing activities 962,643 6,783,087 (524,554) 6,797,464
Net increase in cash and cash equivalents 2,475,257 1,180,747 2,034,854 (2,390,477)
Cash and cash equivalents at beginning of period 6,332,007 5,151,260 8,147,412 10,537,889
Cash and cash equivalents at end of period 8,807,264 6,332,007 10,182,266 8,147,412
Reconciliation of cash and cash equivalents
2006 2005 2006 2005
Cash and Short Term Funds 2,972,529 3,059,541 3,024,763 3,073,569
Treasury Bills/Bonds maturing less than one year 4,534,735 2,543,087 5,820,220 4,298,988
Securities purchased under resale agreements 1,300,000 729,379 1,337,283 774,855
8,807,264 6,332,007 10,182,266 8,147,412
SEYLAN BANK - Annual Report 2006
61

Notes to the Accounts
SEYLAN BANK - Annual Report 2006
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 GENERAL
Seylan Bank Limited is a public quoted company
incorporated on August 28, 1987 and domiciled in
Sri Lanka. The Consolidated Financial Statements of
the Bank for the year ended December 31, 2006
comprise the Bank (parent company) and its
Subsidiaries (together referred to as the Group).
The Financial Statements were authorised for issue on
16th May 2007.
1.1.1 Principal Activities
Bank
The principal activities of the Bank are banking and
related activities such as accepting deposits, personal
banking, trade financing, off-shore banking, resident
and non-resident foreign currency operations, travel
related services, corporate and retail credit, project
financing, lease financing, rural credit, issuing of local
and international credit cards, telebanking facilities,
Internet banking, dealing in Government Securities, etc.
Subsidiaries/Associates
The principal activities of the bank’s subsidiaries
namely Seylan Merchant Bank Ltd., Ceylinco Seylan
Developments Ltd. and Seylan Bank Asset
Management Ltd., are merchant banking, property
development and dealing in Government Securities as
a primary dealer respectively.
Open Arc Global Solutions is an associate of Seylan
Merchant Bank Ltd which deals in software marketing.
1.1.2 Accounting Convention
The financial statements are presented in Sri Lanka
Rupees, rounded to the nearest thousand. The Balance
Sheet, Income Statement, Statement of Cash Flow and
the Statement of Changes in Equity are prepared in
conformity with generally accepted accounting
principles and the Sri Lanka Accounting Standards
(SLAS) laid down by the Institute of Chartered
Accountants of Sri Lanka (ICASL) applied consistently
on a historical cost/modified historic cost basis, with
no adjustments being made for inflationary factors
affecting the financial statements except that certain
land and buildings, dealing securities and investment
properties are stated at valuation. Where appropriate,
the policies are explained in the succeeding notes.
All values presented in the financial statements are in
Sri Lankan Rupees Thousands (Rs.‘000s) unless
otherwise indicated. Figures in brackets indicate
deductions.
1.1.3 Foreign Currency Translation (SLAS 21 )
(a) Transactions in foreign currencies are translated to
Sri Lankan Rupees at the middle rate of exchange
ruling at the date of the transaction. Monetary items
denominated in foreign currencies at the Balance
Sheet date are translated to Sri Lankan Rupees at the
middle rate of exchange ruling at that date. Foreign
exchange differences arising on the settlement or
reporting of the Bank’s monetary items at rates
different from those which were initially recorded are
dealt in the Income Statement.
(b) Non monetary assets and liabilities denominated in
foreign currency that are stated at historic cost at the
balance sheet date are translated to Sri Lankan Rupees
at the foreign exchange rates ruling at that date.
Forward exchange contracts are valued at the forward
market rates ruling on the date of the Balance Sheet.
Unrealised gains and losses are dealt with through the
Income Statement.
(c) FCBU balances have been converted at closing rate for
all monetary items and historic rate for non monetary
items. Income Statement of the FCBU has been
converted at the monthly average rate.
1.1.4 Taxation
Provision for taxation is made on the basis of the profit
for the year as adjusted for taxation purposes in
accordance with the provisions of the Inland Revenue
Act No.10 of 2006.
1.1.5 Deferred Taxation
Seylan Bank Ltd
Deferred tax is provided using the balance sheet
liability method providing for temporary differences
between the carrying amounts of the assets and
liabilities for financial reporting purposes and the
amount used for taxation purposes.
62

Notes to the Accounts
Deferred tax assets including those related to
temporary tax effects of income tax losses and credits
available to be carried forward are recognised only to
the extent that it is probable that future taxable profits
will be available against which the asset can be
utilised. Deferred tax assets are reviewed at each
reporting date and are revalued to the extent that it is
no longer probable that the related tax benefit will be
realized.
differences to the extent that they are expected to
reverse in the future. The balance in the deferred
taxation account represents, income tax applicable to
the difference between the written down values for tax
purposes of the assets on which tax depreciation has
been claimed and net book values of such assets
offset by the provision for retirement benefit which is
deductible for income tax purposes only on payments
and brought forward tax losses.
Seylan Merchant Bank Ltd
Deferred taxation is provided under the Balance Sheet
liability method on temporary differences in
accordance with Sri Lanka Accounting Standard No 14
(Revised 2005) “Income Taxes”.
Ceylinco Seylan Development Ltd
Deferred taxation is provided on the liability method.
The tax effect of all timing differences which occur as
a result of items being allowed for income tax
purposes in a period different from that when they are
recognised in the Financial Statements are included as
a provision for deferred taxation at current rates of
taxation.
Deferred taxation is provided on the liability method in
respect of
a) Tax excess of depreciation allowances over historical
cost depreciation.
b) Other material timing differences in so far as a liability
is reasonably expected to crystallize.
Since the Company enjoys seven years tax holiday
from the year of assessment 2003/2004, certain timing
differences will not reverse for a considerable period.
1.1.6 VAT on Financial Services
The base for the computation of VAT on financial
services is the accounting profit before income tax is
adjusted for the emoluments of employees and
subsequent economic depreciation computed on
prescribed rates.
1.1.7 Events After the Balance Sheet Date
All material post balance sheet events have been
disclosed in the Note 39.
1.2. GROUP CONSOLIDATION POLICY
(a) Subsidiaries/Associates
The Group financial statements comprise a
consolidation of the financial statements of the
Company and its subsidiaries incorporated in Sri
Lanka, Seylan Bank Asset Management Ltd (100%),
Seylan Merchant Bank Ltd. (42.88%) including non
voting shares and an indirect holding, and Ceylinco
Seylan Development (51.02%) with an indirect holding.
The financial statements of Seylan Merchant Bank
comprise a consolidation of the Company and its
subsidiaries SMB Money Brokers (Pvt) Ltd. (51%),
Seylan Merchant Leasing Ltd. (84.23%), SMB Real
Estate Ltd. (100%) and SMB Securities (Pvt) Ltd (100%).
The Company has a brought forward tax loss of
Rs.747,540,116/=.
Considering the above tax effect of such timing
differences have been excluded from the tax expenses
for the period under review and periods preceding it.
Seylan Bank Asset Management Ltd
Provision has been made for deferred taxation during
the year by reference to SLAS – 14 (Revised 2005).
Deferred taxation is provided based on temporary
Subsidiary Companies
Nature of Business
Seylan Bank Asset Management Ltd. Primary Dealer
Ceylinco Seylan Development Ltd. Property Developers
Seylan Merchant Bank Ltd.
Financial Services
SMB Money Brokers (Pvt) Ltd. Money Brokers
Seylan Merchant Leasing Ltd. Leasing
SMB Real Estate Ltd.
Real Estate
SMB Securities (Pvt) Ltd.
Stock Brokering
Associate Company of Seylan Merchant Bank Ltd.
Open Arc Global Solutions (Pvt) Ltd. Software Marketing
SEYLAN BANK - Annual Report 2006
63

Notes to the Accounts
The total profit/loss of the subsidiaries are included in
No. 33 of 1995 and Act No. 2 of 2005. Accordingly, the
the consolidated Income Statement, and the
Bank has adopted a policy of marking to market its
proportion of the Profit or Loss after taxation
“Trading Portfolio” of Government Securities from June
applicable to outside shareholders is shown under the
2006 on a prospective basis.
heading "Minority Interest” (SLAS 26). All assets and
liabilities of the Company and its subsidiaries are
included in the Group Balance Sheet. The interest of
the outside shareholders in the net assets of the
Group is stated separately in the consolidated Balance
Sheet within equity under the heading “Minority
Interest”.
Investments in Treasury Bills and Bonds held to
maturity are reflected at the value of the Bills/Bonds
purchased and the discount/premium accrued
thereon. Discount received/premium paid is taken to
the Income Statement based on a pattern reflecting a
constant periodic rate of return, in accordance with
the Sri Lanka Accounting Standard No. 22 - “Accounting
(b)
Inter-Group Transactions
for Investments”.
(c)
(d)
Inter-group balances and inter-group transactions and
resulting unrealised profits are eliminated in full in the
consolidated financial statements.
Profit and Loss
In arriving at the profit attributable to the shareholders
of Seylan Bank Ltd, the total profits or losses of the
subsidiaries are included in the consolidated income
statement after eliminating inter-group transactions
and the portion of the profit or loss after taxation
applicable to non group shareholders.
Assets and Liabilities
All assets and liabilities of the Company and its
subsidiaries are included in the consolidated Balance
Sheet. The proportionate interest of the non group
shareholders in the net assets employed is stated
separately in the consolidated Balance Sheet under
the heading “Minority Interest”.
(b)
Securities purchased under Re-sale Agreements are
advances collateralised by purchase of Treasury Bills
and Treasury Bonds from the public subject to a
commitment to re-sell them at a predetermined price.
Such securities remain on the Balance Sheet of the
Bank and the asset is recorded in respect of the
consideration paid and interest accrued thereon.
Seylan Bank Asset Management Ltd
In line with the regulations of the Central bank of
Sri Lanka (CBSL), Seylan Bank Asset Management
Limited changed its Accounting Policy on Reporting
Securities Portfolio commencing from June 2003.
Accordingly, the Trading Portfolio is being marked to
market based on the weighted average rates circulated
by CBSL and gains or losses recognised in the Profit &
Loss Account.
Advances to Customers
Openarc Global Solutions (Pvt) Ltd. is an associate of
Advances to customers are stated in the Balance
Seylan Merchant Bank. Gains and losses of the
sheet net of provisions for possible loan losses and
associate company has been recorded under the
also net of interest which is not accrued to revenue.
equity method and carrying value of investment has
Bank’s policy is to zerowise interest in suspense of non
shown in the consolidated Balance Sheet.
performing loans and advances after 12 months.
1.3. ASSETS AND BASIS OF THEIR VALUATION
(c)
Provision for loan losses and leases:
SEYLAN BANK - Annual Report 2006
1.3.1 (a) Treasury Bills and Bonds
Seylan Bank Ltd
The Bank has changed its Accounting Policy on
Reporting Securities Portfolio to fall in line with the
directions made by the Monetary Board of the Central
Bank of Sri Lanka under S 46 (1) of the Banking Act No.
30 of 1988 amended by the Banking (Amendment) Act
Provisions for possible loan losses are made on the
basis of continuous review of all advances to
customers, in accordance with the applicable
accounting standard and the requirement as given by
the Central Bank of Sri Lanka based on an aged
classification of advances as follows:
64

Notes to the Accounts
Period Outstanding Classification Provision
Required Net of
Realisable Value
of Securities
6 - 12 Months Sub – Standard 20%
12 - 18 Months Doubtful 50%
18 Months and over Loss 100%
As per the “Hair Cut Rule”of the Central Bank of
Sri Lanka, the extent upto which securities can be
discounted for provisioning purposes is 75% at the
time of first provisioning, 60% for non-performing loans
between 1-2 years in the loss category and 50% for
those between 2-3 years in the loss category. It will be
at the discretion of the management for cases over
four years in the loss category.
The Bank makes a general provision of 1/10th of 1% on
a quarterly basis commencing from the fourth quarter
ended 31.12.2006 (as per direction issued on 21st
November 2006) of total performing loans & advances
and overdue loans & advances that have not been
classified as substandard, doubtful or loss for
provisioning purposes in terms of the directions issued
on 22.08.1997 under the Section 46 A of Banking Act
on Suspension of Interest on non performing advances
and classification of bad & doubtful debts for provision
purposes.
(d)
(e)
Such securities are recorded at market values and
adjustments for changes in market values is
accounted for in the income statement.
The quoted ordinary shares classified as Dealing
Securities were recorded at the lower of cost or
market value on a aggregate portfolio basis in the
previous years. The requirement to value at mark to
market was stipulated by the direction issued by the
Central Bank of Sri Lanka, on prudential norms for
classification valuation and operation of the Bank’s
“Investment Portfolio” dated 1st March 2004.
Unquoted investments are stated at cost.
Investment Securities
These are acquired and held for yield or capital growth
in the medium/long term. Such securities are recorded
at cost. Changes in market values of these securities
are not taken into account unless there is considered
to be a permanent diminution in value.
Investment Properties
Investments in land that are not occupied substantially
for use by or in the operations of the Bank are
classified as Investment Properties. Investment
Properties of the Company are stated based on the
cost model as stated in Note 23.
1.3.2 Investments (SLAS 22)
(a) Investments in Subsidiaries
Investments in Subsidiaries are stated at cost in the
Bank’s Financial Statements in accordance with the
Sri Lanka Accounting Standard No. 26 - “Consolidated
Financial Statements” and “Accounting for Investments
in Subsidiaries”.
(b) Investments in Associates
Investments in Associates are accounted for under the
Cost Method in the Bank’s Financial Statements and
under the Equity Method in Consolidated Financial
Statements accordance with the Sri Lanka Accounting
Standard No. 27 - “Accounting for Investments in
Associates”.
(c) Dealing Securities
These are marketable securities acquired and held
with the intention to resale over a short period of time.
(f) Other Investments
Where the group interest in equity is less than 20%
and/or in companies where the Bank does not
exercise significant influence and/or control over the
financial and operating policies, investments are
valued at cost.
1.3.3 Property, Plant and Equipment
(a) Property, Plant and Equipment are recorded at cost of
purchase or valuation together with any incidental
expenses thereon. The assets are stated at cost or
valuation less accumulated depreciation which is
provided for on the basis specified in (b) below.
(b) Depreciation is provided at the rates indicated below
on straight-line basis over the period appropriate to
the estimated lives of the different types of assets.
SEYLAN BANK - Annual Report 2006
65

Notes to the Accounts
Seylan Bank Ltd.
The Property at No.90 Galle Road, Colombo 03, which
Assets purchased prior to 01st January 1999 have
includes the leasehold land, buildings and equipment,
been depreciated over the remaining useful life based
and comprises two towers namely ‘East and West’,
on the revised depreciation rates. Assets purchased
were revalued on open market effective value basis.
after 01st January 1999 have been depreciated based
The surplus arising on the revaluation was transferred
on revised rates.
to capital reserve account.
Previous
Revised
Life Rate Life Rate
Period
Period
The value pertaining to the East tower is apportioned
on a square feet area basis and is stated at valuation
Freehold Building 25 Yrs 4.0% 40 Yrs 2.5%
Motor Vehicles 3 Yrs 33 1/3 % 5 Yrs 20%
less accumulated depreciation under Property, Plant &
Equipment.
Computer Equipment 5 Yrs 20% 6 Yrs 16.67%
Office Equipment,
Furniture & Fittings
& Leased Assets 3-10 Yrs 33 1/3%-10 % 3-10 Yrs 33 1/3%-10%
Freehold land, antiques and ornamental paintings are
not depreciated. Leasehold land and buildings are
depreciated over the remaining unexpired lease
period. The depreciation of other assets is provided on
Assets are depreciated from the month of purchase to
the month of disposal. Depreciation is not provided for
the straight line method at varying rates per annum
based on their useful lives as follows:-
freehold land.
Depreciation
Rate
Useful Life
(Years)
Seylan Merchant Bank Ltd.
Motor Vehicles
20% per annum
Computers
20% per annum
Office Equipment, Furniture & Fittings 20% per annum
Leased Assets
20% per annum
Leasehold Land 1.23% Over 81 Years
Building 1.23% Over 81 Years
Furniture & Fittings 10% Over 10 Years
Equipment 20% Over 05 Years
Interior Decor 50% Over 02 Years
Depreciation of an asset begins when it is available for
use and ceases at the earlier of the date that the asset
is classified as held for sale and the date that the asset
is derecognized. Leased assets are depreciated over
the shorter of the leased term and their useful lives.
Depreciation is not provided for freehold land.
Motor Cars 20% Over 05 Years
Motor Cycle 25% Over 04 Years
Tools 33.33% Over 03 Years
Cutlery & Crockery 50% Over 02 Years
Equipment-West Tower 50% Over 02 Years
Furniture-West Tower 33.33% Over 03 Years
Interior-West Tower 33.33% Over 03 Years
Seylan Bank Asset Management Ltd.
Building Improvements
20% per annum
Motor Vehicles
20% per annum
Computer Software & Hardware 20% per annum
Maintenance
Management Software 20% Over 05 Years
Accounting Software 20% Over 05 Years
General Plant & Equipment 5% Over 20 Years
Office Equipment, Furniture & Fittings 20% per annum
A provision for the depreciation is not made for assets
SEYLAN BANK - Annual Report 2006
Assets are depreciated from the month of purchase to
the month of disposal.
Ceylinco Seylan Development
Property, Plant and Equipment are recorded at cost of
purchase or valuation together with any incidental
expenses thereon. The Assets are stated at cost or
valuation less accumulated depreciation which is
provided for on the basis specified below:
(c)
in the year of acquisition or construction. However,
depreciation for the full year is provided in the year of
disposal.
The Bank applies the revaluation model for the entire
class of Freehold Land & Building. Such properties are
carried at revalued amounts being its fair value at the
date of revaluation, less any subsequent depreciation
and subsequent accumulated impairment losses.
66

Notes to the Accounts
During the year, land and buildings which have not
been valued/revalued for the last seven years were
valued and accounted in the books.
The Bank has not carried out an acturial valuation of
investments in the Gratuity Trust Fund since all
investments are risk free.
1.3.4 Impairment of Fixed Assets
Seylan Bank Ltd. and Seylan Merchant Bank Ltd.
Carrying amounts of the assets are reviewed at each
reporting date to determine whether there is any
indication of Impairment. If such indication exists, and
where the carrying values exceed the estimated
recoverable amount, the assets are written down to
their recoverable amount. Impairment losses are
recognised in the Income Statement.
Ceylinco Seylan Development
The carrying values of property plant & equipment are
reviewed for impairment annually or when events or
changes in circumstances indicate the carrying value
may not be recoverable. If any such indications exist
and where the carrying values exceed the estimated
recoverable amount, the assets are written down to
their recoverable amount. Impairment losses are
recognised in the income.
Gratuity provisions are mainly funded by the Bank to a
separate Gratuity Trust Fund, which is an approved
investment for tax purposes. The Bank makes annual
contributions to the Fund, not exceeding a total sum
equivalent to the half a month salary of each and
every employee as depicted in the last month of the
accounting year, together with an additional 25% of the
total thereof.
Employee Provident Fund
The Bank and employees contribute to the approved
private Provident Fund. The total amount recognised
as an expense for the current year is Rs.158.46 Million.
(Rs.133.99 Million in 2005)
Employee Trust Fund
The total amount recognised as an expense to the
Bank for contribution to ETF for the current year is
Rs.39.77 Million. (Rs.31.32 Million in 2005)
1.4. LIABILITIES AND PROVISIONS
1.4.1 Commitments and Contingencies
All discernible risks are accounted for in determining
the amount of Other Liabilities.
1.4.2 Retirement Benefits
Gratuity
Full provision has been made in the accounts for
retiring gratuity from the first year of service of the
employee in conformity with SLAS.16 - “Retirement
Benefit Costs”. However, according to the payment in
the Gratuity Act No.12 of 1983, the liability for gratuity
to an employee arises only on completion of five years
of continuous service.
Further, The Bank makes an additional provision of half
a month on basic salary for the staff members who
have completed 10 years of service or above at their
retirement. The arising additional liability is considered
as a Past Service Cost and accordingly 1/5th is
charged over the next five years commencing from
1/1/2005 for the liability arising up to 31/12/2004.
New liability for periods thereafter is charged in the
same period.
1.5. INCOME STATEMENT
1.5.1 Revenue Recognition
Interest Income : Interest receivable is recognised on
an accrual basis. Interest ceases to be taken into
revenue when the recovery of interest or principal is in
arrears for over three (3) months [Six (6) months in the
case of Seylan Merchant Bank] Thereafter, interest on
advances is accounted for on a cash basis.
Interest on non-performing debts is credited to the
“Interest in Suspense” Account which is netted in the
Balance Sheet against the relevant balance.
1.5.2. Accounting for Lease Income
All leases are Finance Leases. As such, income
recognised is the interest component of the lease
rentals receivable during the year.
Finance Leases:
Assets leased to customers which transfer
substantially all the risks and rewards associated with
ownership other than the legal title are classified as
finance leases. Amount receivable under finance
leases are included under “Lease Rental Receivable”.
SEYLAN BANK - Annual Report 2006
67

Notes to the Accounts
Leasing balances are stated in the Balance Sheet after
deduction of initial rentals received.
The excess of aggregate rentals receivable over the
cost of the leased assets constitutes the total
unearned income. The unearned income is taken into
revenue over the term of the lease, commencing from
the month in which the lease is executed in proportion
to the remaining receivable balance of the lease.
1.5.3 Accounting for Operating Lease Income
Seylan Merchant Bank rental income is recognised as
revenue on a straight line basis over the term of lease.
However, no accrued rental income is recognised
where any portion of capital or interest is in arrears for
six months or more. In such cases, interest income is
accounted for on a cash basis.
1.5.4 Fee and Commission Income
All fee and commission income have been recorded
on a cash basis.
1.5.5 Real Estate Income
Seylan Merchant Bank recognised income when the
properties are sold and buyers has taken the
possession of such properties. For this purpose,
properties are deemed to be sold, once 25% of the
outright sales price has been received.
1.5.6 Profit or Loss on Sale of Property, Plant &
Equipment/Investments
Gains or losses of a revenue nature on the disposal of
Property Plant & Equipment and share portfolio are
accounted for in the Income Statement.
1.5.7 Dividend Income
Dividend Income is recognised in the period in which it
is declared.
1.6 Segment Reporting
A segment is a distinguishable component of the
Group that is engaged in providing services within a
particular economic environment, which is subject to
risk and rewards that are different from those of other
segments.
In accordance with the Sri Lanka Accounting Standard
No. 28 - “Segment Reporting”, segment information is
presented in respect of the Group. The segments
comprise banking, leasing, dealing and
property/investment.
Inter-segment transactions are based on fair market
prices.
1.7 Cash Flow
The Cash Flow has been prepared by using the direct
method. Cash and cash equivalents comprise cash
balances, balances with banks, Treasury Bills and
Bonds (maturing within one year) and other short term
funds held by the Bank.
1.8 Intangible Assets - Seylan Merchant Bank Ltd.
Intangible assets comprise of the initial acquisition cost
of the license fee at the inception for stock brokering
license. The cost is amortised using the straight line
basis at the rate of 20% per annum commencing from
the date of acquisition. The amortised amount is based
on the best estimate of its useful life, such that the
cost is amortised fully at the end of the useful life. The
amortisation cost is recognized as an expense in the
Income Statement.
1.9 Comparative Figures
Where necessary, amounts shown for the previous
year have been reclassified to facilitate comparison.
SEYLAN BANK - Annual Report 2006
1.5.8 Interest Expenses
Interest payable is recognised on an accrual basis.
Other expenses have been recognised in the accounts
as they are incurred in the period to which they relate,
except to the extent they are capitalised in accordance
with Sri Lanka Accounting Standards 20 –
“Capitalisation of Borrowing Cost”.
1.10 Directors’ Responsibility Statement
Please refer page 55 for the Statement of Directors’
Responsibility.
68

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
2 INCOME
Gross Income 17,183,481 13,090,715 18,684,144 14,373,553
17,183,481 13,090,715 18,684,144 14,373,553
Income of the Company resulted mainly from the business of banking and related activities.
3 INTEREST INCOME
Customer Advances 12,419,628 9,446,893 13,018,882 10,010,465
Treasury Bills & Placements with Other banks 1,676,796 1,061,443 2,265,884 1,518,696
Interest Income on Debentures 27,428 32,091 12,778 16,169
Other Interest Income 97,311 86,618
14,123,852 10,540,427 15,394,855 11,631,948
4 INTEREST EXPENSES
Customer Deposits 6,569,483 4,456,803 6,569,483 4,456,803
Borrowings & Refinance 501,254 245,128 912,681 567,485
Treasury Bills Repurchased 404,927 147,873 949,915 508,881
Interest Expenses Debentures 519,295 425,116 583,884 528,664
Other Interest Expenses - - 13,016 25,897
7,994,959 5,274,920 9,028,979 6,087,730
5 OTHER INCOME
Net Foreign Exchange Gain 600,899 501,089 600,899 501,089
Dividend Income from Dealing Securities - Quoted 20 2,982 1,339 5,214
Dividend Income from Investment Securities - Quoted 2,407 - 2,407 -
- Unquoted 269 - 431 -
Dividend Income from Investments in Associates/Subsidiaries 19,496 11,377 - -
Capital Gains/(Losses) from Government Securities (25,146) 41,216 (27,063) 43,771
Fee & Commission Income 1,332,192 1,297,056 1,349,813 1,347,873
Profit/( Loss ) on Sale of Property, Plant & Equipment 11,988 (468) 18,298 9,592
Profit/( Loss ) on Sale of Investment Property 53,764 22,934 53,764 42,934
Profit/( Loss ) on Sale of Investment Securities - - 37,007 34,545
Profit/( Loss ) on Sale of Shares of Associates / Subsidiaries - 24,797 - 48,633
Gains/( Loss ) on sale of Dealing Securities - 22,311 (30,809) (2,936)
Bad Debts Written Back & Recovered 1,063,740 626,994 1,063,740 626,994
Others - - 219,463 83,896
3,059,629 2,550,288 3,289,289 2,741,605
6 OPERATING EXPENSES
Operating Expenses include the following :-
Directors’ Emoluments 42,830 33,061 59,609 40,788
Auditors’ Remuneration - Audit 2,711 4,891 3,932 5,598
- Non Audit 2,177 1,062 2,989 1,062
Depreciation 533,187 451,376 581,201 502,367
Donations 34,432 76,779 41,497 84,355
Expenses on Litigation 56,798 44,375 58,219 47,220
SEYLAN BANK - Annual Report 2006
69

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
7 Loan Losses and Provisions
Provision for Bad & Doubtful Debts - Specific 1,567,542 1,971,974 1,591,540 1,990,193
Provision for Bad & Doubtful Debts - General 71,974 - 71,974 -
Direct Write Off 44,979 40,091 64,629 60,954
1,684,495 2,012,065 1,728,143 2,051,147
8 Taxation
8.a Charges to Taxation is as follows:
Taxation based on profits for the year 914,784 398,141 933,658 409,188
Effect on Change of Tax Rate - Note 31 87,625 - 88,108 -
Increase/(Decrease) in Deferred Tax Provision - Note 31 (257,688) (24,941) (268,060) (24,806)
(Over)/Under provision of taxes in previous years - - 3,017 8,909
744,721 373,200 756,723 393,291
(i)
Income tax on profits has been computed at the rate of 35% on the taxable income arising from the domestic
operations and On-Shore Banking operations of FCBU and 20% on the taxable income from off-shore banking
operations of the Foreign Currency Banking Unit together with 1% SRL.
(ii)
According to Section 123 A of the Inland Revenue Act (Amended by Act No 19 of 2003), any person who derives
income from the secondary market transactions in government securities is entitled to a notional tax credit in relation
to the tax payable by such person. Notional tax credit would be determined by grossing the income from the
secondary market transactions to an amount equal to 1/9 the of same and credit to be afforded for a like sum.
Accordingly the Bank has accounted for Rs.61,990,778 as notional tax credit for the year 2006. (Rs.67,666,667 for
2005.)
(iii)
The group companies have computed taxation based on the applicable rates for such companies.
8.b Reconciliation of Accounting Profit and Taxable Income
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Profit as per the Income Statement 1,606,882 1,061,033 1,663,948 1,213,997
Add : Disallowable Expenses 4,481,225 3,835,636 4,478,843 5,257,364
Less : Allowable Expenses 3,177,020 3,202,620 3,177,020 3,888,953
Exempt/Allowable Income 65,751 69,574 65,751 918,200
Statutory Income of the Business 2,845,336 1,624,475 2,900,020 1,664,208
Less : Dividend/Interest Income from
Primary Market Activities 242,960 99,620 242,960 104,525
Tax Losses set off - 201,029 - 217,495
Assessable Income 2,602,376 1,323,826 2,657,060 1,342,188
SEYLAN BANK - Annual Report 2006
Less : Qualifying Payments - - - -
Taxable Income 2,602,376 1,323,826 2,657,060 1,342,188
Bank - Domestic Banking Unit & On Shore Profits - 35% 898,920 397,148 898,920 397,148
Off Shore Profits - 20% 6,806 - 6,806 -
Seylan Bank Asset management Ltd - 35% - - 409 1,601
Seylan Merchant Bank Ltd - 30% - - 2,745 5,202
Ceylinco Seylan Developments Ltd - 35% - - 15,528 4,219
Social Responsibility Levy (SRL) 9,058 993 9,250 1,018
70
914,784 398,141 933,658 409,188

Notes to the Accounts
9 Basic Earnings Per Share
Basic Earnings Per Share has been calculated by dividing profit after taxation, minority interest and preference dividends by
the weighted average number of Ordinary Shares in issue (Both Voting and Non Voting) during the year ended 31st
December 2006.
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Net Profit attributable to shareholders of the Bank 862,161 687,833 848,744 777,339
Preference Dividends (2,934) (2,911) (2,934) (2,911)
859,227 684,922 845,810 774,428
Number of Ordinary Shares 167,120 83,560 167,120 83,560
Weighted average No. of ordinary shares 132,303 - 132,303 -
Basic Earnings Per Share (Rs.) 6.49 8.20 6.39 9.27
10 Dividends
Proposed dividends is accounted for in terms of Sri Lanka Accounting Standards 12 - Events after the Balance Sheet date
(revised).
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Ordinary Share Dividends (10.a) 334,240 141,491 334,240 152,966
Preference Share Dividends (10.b) 2,956 2,943 2,956 2,943
337,196 144,434 337,196 155,909
10.a Ordinary Share Dividend
Net Dividend 300,816 128,120 300,816 139,596
Tax deducted at source 33,424 13,371 33,424 13,370
Gross Dividend 334,240 141,491 334,240 152,966
10.b Preference Share Dividend
Net Dividend 2,956 2,649 2,956 2,649
Tax deducted at source - 294 - 294
Gross Dividend 2,956 2,943 2,956 2,943
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
11 Cash and Short Term Funds
Cash in hand 2,767,592 2,788,707 2,776,860 2,796,238
Cash at Bank - - 42,966 6,497
Balances with Banks 204,937 270,834 204,937 270,834
2,972,529 3,059,541 3,024,763 3,073,569
12 Balance with Central Bank of Sri Lanka
Cash balance is required to be maintained with the Central Bank of Sri Lanka according to statutory requirements.
At present, the minimum cash reserve requirement is 10% of the deposit liabilities.
SEYLAN BANK - Annual Report 2006
71

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
13.1 Treasury Bills and Bonds eligible for rediscounting
with the Central Bank
Treasury Bills 464 63,537 38,215 175,850
Treasury Bills under Repos’ - - 23,986 727,084
Treasury Bonds 2,486,271 806,825 2,555,205 893,243
Treasury Bonds under Repos’ 2,048,000 - 3,202,814 830,086
Sri Lanka Development Bonds - (US Dollar) - 1,672,725 - 1,672,725
4,534,735 2,543,087 5,820,220 4,298,988
13.2 Treasury Bonds maturing after one year
Treasury Bonds 2,536,345 4,115,682 2,941,265 4,180,264
Treasury Bonds under Repos’ 2,666,355 4,663,152 4,457,115 8,812,279
Sri Lanka Development Bonds - (US Dollar) 6,396,250 - 6,396,250 -
11,598,950 8,778,834 13,794,630 12,992,543
14 Government and other securities held for dealing purposes
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Quoted (Note 14.a) 143 - 287 434
Total 143 - 287 434
14.a Quoted (Analysis of Group)
Held by Seylan Bank Ltd. at Market Value 143 -
(refer Note 14.a.1)
Held by Seylan Merchant Bank Ltd. at Cost 144 434
(refer Note 14.a.2)
287 434
Seylan Bank Ltd.
14.a.1 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
Vallibel Power Erathna Ltd. 75,000 200 143 - - -
200 143 - -
SEYLAN BANK - Annual Report 2006
72

Notes to the Accounts
Seylan Merchant Bank Ltd.
14.a.2 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
Pugoda Textile Mills Ltd. 7,500 253 - 7,500 253 -
Magpek Exports Ltd. 125,000 5,000 - 125,000 5,000 -
Richard Pieris Ld. - - - 4 - -
Hayleys Ltd. - - - 72 8 7
Hemas Holdings Ltd. 75 8 8 75 8 8
ACL Cables Ltd. 33 3 3 33 3 3
Malwatte Plantations Ltd. - - - 12,100 128 100
Maskeliya Plantations Ltd. - - - 6,200 144 102
Pegasus Hotels Ltd. - - - 400 9 7
Nawaloka Hospitals Ltd. 100,000 532 330 100,000 532 250
Diminution in Value (5,653) - - (5,653) -
144 341 434 477
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
15 Placements with and loans to other banks and finance companies
Banks 1,448,038 2,211,922 1,473,016 2,221,431
1,448,038 2,211,922 1,473,016 2,221,431
16. Investment Securities BANK GROUP
31.12.2006 31.12.2005 31.12.2006 31.12.2005
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Quoted (Note 16.a) 38,201 38,201 66,237 111,115
Unquoted (Note 16.b) 120,290 120,290 257,391 249,063
Total 158,491 158,491 323,628 360,178
16.a Quoted
Held by Seylan Bank Ltd. 38,201 38,201 38,201 38,201
(refer Note 16.a.1)
Held by Seylan Merchant Bank Ltd. 20,668 59,795
(refer Note 16.a.2)
Held by Ceylinco Seylan Developments Ltd. 2,394 2,394
(refer Note 16.a.3)
Held by Seylan Bank Asset Management Ltd. 4,974 10,725
(refer Note 16.a.4)
Total 38,201 38,201 66,237 111,115
16.b Unquoted
Held by Seylan Bank Ltd. 120,290 120,290 120,290 120,290
(refer Note 16.b.1)
Held by Seylan Merchant Bank Ltd. 66,042 72,294
(refer Note 16.b.2)
Held by Ceylinco Seylan Developments Ltd. 8,034 6,259
(refer Note 16.b.3)
Held by Seylan Bank Asset Management Ltd. 63,025 50,220
(refer Note 16.b.4)
SEYLAN BANK - Annual Report 2006
Total 120,290 120,290 257,391 249,063
73

Notes to the Accounts
Seylan Bank Ltd.
16.a.1 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
Arpico Finance Ltd. 60,651 4,356 5,762 60,651 4,356 3,639
Ceylinco Insurance
Company Ltd. 933,055 11,399 156,287 777,546 11,399 58,316
The Finance Co. Ltd. 110,160 1,606 6,004 110,160 1,606 3,745
Blue Diamonds Jewellery
World Wide Ltd. 3,815,243 10,818 14,116 3,815,243 10,818 13,353
Ceylinco Securities &
Financial Services Ltd. 2,700 22 54 2,700 22 43
Debentures
Hatton National Bank Ltd.-(13.75%) 10,000 10,000 10,000 10,000
(100,000 Debentures of Rs.100/= each)
38,201 192,223 38,201 89,097
16.b.1 Unquoted
31.12.2006 31.12.2005
No.of Ord. Directors’ No.of Ord. Directors’
Shares Cost valuation Shares Cost valuation
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Credit Information Bureau
of Sri Lanka 2,900 290 2,330 2,900 290 1,632
Transnational Lanka Records
Solutions (Pvt) Ltd. 1,000,000 10,000 10,290 1,000,000 10,000 9,500
Lanka Clear (Pvt) Ltd 1,000,000 10,000 30,950 1,000,000 10,000 30,980
Debentures
Singer Sri Lanka Ltd-(12.50%) 75,000 75,000 - 75,000 75,000
(750,000 Debentures of Rs.100/= each)
Hatton National Bank Ltd-(10%) 25,000 25,000 - 25,000 25,000
(250,000 Debentures of Rs.100/= each)
120,290 143,570 120,290 142,112
SEYLAN BANK - Annual Report 2006
74

Notes to the Accounts
Seylan Merchant Bank Ltd.
16.a.2 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
The Finance Co Ltd 108,997 5,652 5.940 108,997 5,652 3,706
Ceylinco Securities & Financial Services Ltd. - - - 40,000 800 640
Ceylinco Insurance Company Ltd. - - - 229,920 7,837 17,244
Blue Diamonds Jewellery World Wide Ltd. 3,180,280 47,818 11,767 3,180,280 47,818 11,131
Metal Recyclers Colombo Ltd. 69 3 - 69 3 -
Lanka Indian Oil Co. Ltd. 40,400 2,131 1,151 40,400 2,131 1,333
Royal Ceramics Lanka Ltd. 410,000 2,013 1,476 410,000 2,013 1,230
Ceylon Glass Co. Ltd. 265,000 1,012 636 265,000 1,012 596
Grain Elevators Ltd. 38,700, 958 522 38,700 958 493
Tokyo Cement 100,000 1,836 1,700 100,000 1,836 1,200
Distilleries Company of Sri Lanka Ltd - - - 11,000 569 385
Kotmale Holding Ltd 15,000 236 184 15,000 236 146
Lanka Milk Foods Ltd - - - 35,800 1,086 743
Keells Hotels Ltd - - - 5,000 456 405
Galadari Hotel Ltd. 15,400 280 173 15,400 275 173
Reefcomber Hotel Co. Ltd. 107,700 242 118 107,700 242 135
Ruhunu Hotels Ltd 10,000 213 110 10,000 213 125
Stafford Hotel Co. Ltd. - - - 36,000 506 306
Ceylon Hospitals Ltd - - - 1,302,600 27,655 19,790
John Keells Holdings Ltd 42 6 8 5,900 1,015 763
Sierra Cables Ltd 5,400 15 11 10,800 32 27
Touch Wood 1,000 152 146 - - -
Dialog Telekom Ltd 10,000 284 265 - - -
Commercial Bank Ltd 50,000 500 463 - 500 513
(50,000 Preference Shares of Rs.10 /= each)
Commercial Bank Ltd 1,500 367 285 - - -
(1,500 Ordinary Shares of Rs.10 /= each)
Diminution in Value (43,050) (43,050)
20,668 24,955 59,795 61,083
16.b.2 Unquoted
31.12.2006 31.12.2005
No.of Ord. Cost No.of Ord. Cost
Shares Rs.’000 Shares Rs.’000
Ceylinco Cisco Security Corporation (Pvt) Ltd. - - 25,000 250
Ceylinco Home Developers Credit &
Investment Ltd. - - 300,000 3,000
Ceylinco Sports Complex Ltd. 300,000 3,000 300,000 3,000
Ceycom Global Communication Ltd. - - 40,500 405
Green Agro Lanka (Pvt) Ltd. - - 50,000 500
Middleway Ltd - - 388,889 4,027
Ceylinco Express Ltd. 37,050 371 37,050 371
Ceylinco Venture Capital Co. Ltd - - 95,000 -
Ceylinco Savings Bank Ltd 1,189,600 11,896 1,189,600 11,896
Ceylinco Foliage Exports (Pvt) Ltd - - 200,000 2,000
Ceywins Telemedical Services (Pvt) Ltd. 300,000 3,000 - -
Ceylinco Freight International (Pvt) Ltd. 68,000 680 - -
Openarc Global Solutions (Pvt) Ltd. 45,000 450 - -
Seraka Investment Ltd - 48,645 - 48,645
(5,655,900 Non Cumulative, Non
Redeemable Preference shares)
Debentures
The Finance & Guarantee Company Ltd. - 200
(2000 Debentures of Rs.100/= each)
Diminution in Value (2,000) (2,000)
Total 66,042 72,294
SEYLAN BANK - Annual Report 2006
75

Notes to the Accounts
Ceylinco Seylan Developments Ltd.
16.a.3 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
Ceylinco Securities & Financial Services Ltd. 200,000 2,000 4,000 200,000 2,000 3,200
Associated Property Developers Ltd. 100 1 6 100 1 4
C T Land Developers Ltd. 100 1 17 100 1 1
Ceylinco Housing & Real Estate Ltd. 250 2 9 250 2 8
Colombo Fort Land & Building Company Ltd. 100 1 21 100 1 1
Overseas Reality Ceylon Ltd. 100 - 1 100 - 1
Kelsey Developments Ltd. 100 1 3 100 1 3
Associated Property Development Ltd. 100 2 6 100 2 3
Colombo Land & Development Company Ltd. 1,250 - 6 1,250 - 4
East West Company Ltd. 100 1 1 100 1 1
Equity One Ltd. 100 1 3 100 1 2
O’nally Holdings Ltd. 100 1 3 100 1 2
York Arcade Holdings Ltd. 100 - 1 100 - 1
Blue Diamonds Jewellery &
Worldwide Co. Ltd. 170,000 383 63 170,000 383 595
2,394 4,140 2,394 3,827
16.b.3 Unquoted
31.12.2006 31.12.2005
No.of Ord. Cost No.of Ord. Cost
Shares Rs.’000 Shares Rs.’000
SEYLAN BANK - Annual Report 2006
Ceylinco Venture Capital Investment Ltd . 95,000 950 95,000 950
Ceylinco Sports Complex Ltd. 220,000 2,200 220,000 2,200
Ceycom Global Communications Ltd. 40,500 405 40,500 405
Asian Finance Co.Ltd. 75,000 750 75,000 750
Ceylinco Savings Bank Ltd. 25,000 250 25,000 250
Ceylinco - Cisco Security
Corporation (Pvt) Ltd. 10,000 100 10,000 100
Ceylinco International Property
Developers (Pvt) Ltd. 50,000 500 50,000 500
Ceyenergy Electronics Co. (Pvt) Ltd. 15,000 150 15,000 150
Ceylinco Swift Care (Pvt) Ltd. 75,000 750 75,000 750
Independent Financial News &
Views (Pvt) Ltd. 4,900 49 4,900 49
Ceylinco International Realty (Pvt) Ltd. 200,000 2,000 200,000 2,000
e.Ceylinco.com (Pvt) Ltd. 60,000 600 60,000 600
International Consultancy &
Corporate Services (Pvt) Ltd. 2,500 25 2,500 25
Ceylinco PLC Technology (Pvt) Ltd. 177,500 1,775 - -
Diminution in Value (2,470) (2,470)
8,034 6,259
76

Notes to the Accounts
Seylan Bank Asset Management Ltd.
16.a.4 Quoted
31.12.2006 31.12.2005
Market
Market
No.of Ord. Cost Value No.of Ord. Cost Value
Shares Rs.’000 Rs.’000 Shares Rs.’000 Rs.’000
Blue Diamond Jewellery
Worldwide Ltd 1,344,200 10,725 4,794 1,344,200 10,725 4,705
Diminution in Value of Investments (5,751)
4,974 4,794 10,725 4,705
16.b.4 Unquoted 31.12.2006 31.12.2005
No.of Ord. Cost No.of Ord. Cost
Shares Rs.’000 Shares Rs.’000
Ceylinco Venture Capital Co. Ltd. 500,000 5,000 500,000 5,000
Ceylinco Foliage Exports (Pvt) Ltd. 700,000 7,000 700,000 7,000
Ceylinco - CISCO Ranaviru Services (Pvt) Ltd. 50,000 500 50,000 500
Ceylinco Niranjan Invention (Pvt) Ltd. 33,249 350 33,249 350
Ceylinco Travels & Tours Ltd. 100,000 1,000 100,000 1,000
Ceylinco Tourist Hotels Ltd. - Hotel Ceysands 33,000 3,500 8,000 1,000
Ceylinco Development Bank Ltd. 300,000 3,000 150,000 1,500
Ceylinco Vocational Training (Pvt) Ltd. 148,200 1,482 148,200 1,482
The Finance & Guarantee Co Ltd 300,000 3,000 300,000 3,000
Ceylinco Employees Sports Complex (Pvt) Ltd. 200,000 2,000 200,000 2,000
Ceylinco Lexcon Services (Pvt) Ltd 45,000 450 45,000 450
Ceylinco Automobiles Ltd 500,000 5,000 500,000 5,000
CTV Creations Ltd 50,000 500 50,000 500
Tropical Foliage Ltd 150,000 1,500 150,000 1,500
Ceylinco Bio Tech Ltd 150,000 1,500 150,000 1,500
Economic Resurgence Association (Pvt) Ltd 1,000,000 10,000 1,000,000 10,000
Ceylinco Seylan Housing &
Commercial Properties Ltd 20,000 200 20,000 200
Ceylinco Building Society 10,000 5,000 10,000 5,000
Ceylinco Aruna Accessories (Pvt) Ltd 25,000 250 25,000 250
The Sitar (Pvt) Ltd 380,000 3,800 200,000 2,000
Independent Financial News & Views (Pvt) Ltd 100,000 1,000 100,000 1,000
Ceylinco Coloured Stones (Pvt) Ltd 100,000 10,000 - -
Ceylinco Freight International (Pvt) Ltd 400,000 4,000 - -
Ceylinco Hotels Ltd 275,000 2,750 - -
Ceylinco Cellular Company (Pvt) Ltd 100,000 1,000 - -
Ceylinco Development Bank Ltd. - 4,000 - 4,000
(400,000 Preference Shares of Rs.10/= each)
Diminution in value of Investment - (16,257) - (5,000)
Debentures
Ceylinco Vocational Training (Pvt) Ltd. - 988 - 988
(9,880 Debentures of Rs.100/= each)
Ceylinco Savings Bank - 1,500 - -
(150,000 Debentures of Rs.10/= each)
Diminution in value of Investments - (988) - -
63,025 50,220
SEYLAN BANK - Annual Report 2006
77

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
17 Bills of Exchange
Export Bills 1,369,780 1,819,148 1,369,780 1,819,148
Import Bills 99,662 166,613 99,662 166,613
Local Bills 358,382 271,484 358,382 275,009
1,827,824 2,257,245 1,827,824 2,260,770
Less : Interest in Suspense (Note 18.c) - - - -
Provision for Bad & Doubtful Debts (Note 18.c) - (102,329) - (102,329)
1,827,824 2,154,916 1,827,824 2,158,441
18 Loans and Advances
Overdrafts 29,087,054 26,826,824 29,087,054 26,826,824
Trust Receipt Loans 4,308,150 4,015,866 4,308,150 4,015,866
Staff Loans 1,860,177 1,590,964 1,866,309 1,592,890
Refinance Loans 1,745,349 1,570,244 1,754,237 1,570,244
Other Loans 54,039,121 45,159,470 55,257,326 46,151,100
91,039,851 79,163,368 92,273,076 80,156,924
Less : Loan loss provision (Note 18.c) (4,442,507) (4,127,895) (4,463,135) (4,146,722)
Interest in suspense (Note 18.c) (2,695,840) (2,265,600) (2,771,526) (2,352,322)
83,901,504 72,769,873 85,038,415 73,657,880
Bank Bank Group Group
2006 2005 2006 2005
Specific General Specific General Specific General Specific General
18.a Movement in Loan Loss Provision
Balance brought forward 4,264,762 2,046 4,428,650 2,046 4,352,785 2,046 4,451,230 53,786
Additional Provision made 1,567,542 71,974 1,971,974 - 1,591,540 71,974 1,990,193 -
Reversal of Provision for write off (528,065) - (1,503,373) - (528,065) - (1,507,889) -
Recoveries made during the year (873,840) - (599,954) - (873,840) - (599,954) -
Exchange Rate variance on foreign
currency provisions 54,146 - (32,535) - 54,146 - (32,535) -
Transfer from General to Specific - - - - - - 51,740 (51,740)
4,484,545 74,020 4,264,762 2,046 4,596,566 74,020 4,352,785 2,046
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
SEYLAN BANK - Annual Report 2006
18.b Movement in Interest in Suspense
Balance brought forward 2,290,632 2,439,111 2,412,373 2,559,138
Interest suspended during the year 1,581,477 1,087,993 1,623,099 1,124,203
Interest recovered during the year (987,079) (850,533) (1,029,117) (882,001)
Reversal of Interest for write off / write down (165,482) (381,104) (165,482) (384,132)
Exchange Rate variance on foreign currency provisions 5,120 (4,835) 5,120 (4,835)
2,724,668 2,290,632 2,845,993 2,412,373
78

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Loan Interest Loan Interest Loan Interest Loan Interest
Loss in Loss in Loss in Loss in
Provision Suspense Provision Suspense Provision Suspense Provision Suspense
18.c Analysis of Provision for
Loan Losses and
Interest in Suspense
Bills of Exchange - - 102,329 - - - 102,329 -
Loans and Advances 4,442,507 2,695,840 4,127,895 2,265,600 4,463,135 2,771,526 4,146,722 2,352,322
Lease Rental Receivable 116,058 28,828 36,584 25,032 207,451 74,467 105,780 60,051
4,558,565 2,724,668 4,266,808 2,290,632 4,670,586 2,845,993 4,354,831 2,412,373
18.d1 Non performing assets included in the Bills of Exchange, loans and advances, Pro notes and lease rental receivable
on which interest is not being accrued are as follows:
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Total Non Performing Advances Excluding
former BCCI Advances 11,150,009 11,119,348 11,420,972 11,408,775
Former BCCI Advances 75,980 91,655 75,980 91,655
11,225,989 11,211,003 11,496,952 11,500,430
Bank
Bank
31.12.06 31.12.05
Advances Advances Change
Rs.'000 % Rs.'000 % %
Total Gross Loans and Advances including
Bills of Exchange, Pro Notes, Lease Rentals
Receivable and Group Balance Receivable 100,747,256 ** 87,930,097 ** 14.58%
Interest In Suspense (2,724,668) (2,290,632) 18.95%
Total Loans and Advances including Bills of Exchange,
Pro Notes, Lease Rentals Receivable and Group
Balance Receivable (Net of Interest in Suspense) 98,022,588 ** 85,639,465 ** 14.46%
Non performing Advances (Gross) 13,950,657 13.85 13,501,635 15.35 3.33%
Non performing Advances *** 11,225,989 11.45 11,211,003 13.09 0.13%
(Net of Interest in Suspense)
Less : Provision for Bad & Doubtful Debts (4,558,565) (4,266,808) 6.84%
Net Non Performing Advances 6,667,424 7.13 6,944,195 8.53 (3.99%)
** As a percentage of total loans and advances as at 31st December.
Rs.6,667.42 million net non performing advances is covered by tangible securities valued at approximately Rs.7,908.18
million.
*** Non Performing Advances (with BCCI) 2006 2005
Rs.'000
Rs.'000
Bills of Exchange 35,150 128,188
Loans & Advances 10,819,504 10,907,102
Lease Rentals Receivable 371,335 175,713
Total 11,225,989 11,211,003
SEYLAN BANK - Annual Report 2006
79

Notes to the Accounts
18.d2 As per the direction issued by Central Bank of Sri Lanka on 31.12.2004, the Non Performing Ratio Net of Interest In
Suspense after inclusion of Investment Properties is as follows (with BCCI):
2006 2005
% %
Non Performing Ratio before adjustment for Investment
Properties 11.45 13.09
Non Performing Ratio after adjustment 11.60 13.49
18.e Balance outstanding on advances granted to Employee Share Owning Trust Companies
Amount Outstanding Amount Outstanding
Name of Trust as at 31.12.2006 as at 31.12.2005
Seybest (Pvt) Ltd. 34,953 37,100
Sesot (Pvt) Ltd. 7,844 11,978
Sotse (Pvt) Ltd. 31,594 31,740
Esot (Pvt) Ltd. 35,483 37,200
Seyshop (Pvt) Ltd. 34,988 37,100
18.f Concentration of Credit Risk
Sectorwise analysis of Bank’s credit portfolio given below reflects the Bank’s exposure to credit risk in the various
sectors of the economy.
Bank Bank Group Group
2006 % 2005 % 2006 % 2005 %
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Food, Beverages and Tobacco 3,397,062 3.73 2,013,145 2.54 3,420,697 3.71 2,035,885 2.54
Agriculture, Agro Business
and Fisheries 4,028,416 4.42 4,800,675 6.06 4,168,994 4.52 4,875,421 6.08
Textiles and Wearing Apparel 6,431,074 7.06 7,968,603 10.07 6,482,427 7.03 7,973,448 9.95
Wood and Paper Products 1,338,062 1.47 967,010 1.22 1,376,539 1.49 974,497 1.22
Rubber and Leather Products 1,232,968 1.35 858,986 1.09 1,283,415 1.39 861,800 1.08
Metals, Chemicals
and Engineering 2,124,180 2.33 3,309,478 4.18 2,223,855 2.41 3,447,402 4.30
Hotels 2,054,745 2.26 2,139,070 2.70 2,077,138 2.25 2,184,550 2.73
Services 5,781,706 6.35 4,840,488 6.11 6,239,997 6.76 5,316,549 6.63
Others 64,651,638 71.03 52,265,913 66.03 65,000,014 70.44 52,487,372 65.47
91,039,851 100 79,163,368 100 92,273,076 100 80,156,924 100
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
SEYLAN BANK - Annual Report 2006
19 Lease Rentals Receivable within one year
From the Balance Sheet date 3,918,565 3,263,602 5,446,031 4,685,788
Less: Unearned Income (991,198) (843,963) (1,339,738) (1,250,737)
2,927,367 2,419,639 4,106,293 3,435,051
Less: Interest in Suspense (Note 18.c) (28,828) (25,032) (74,467) (60,051)
Less: Loan Loss provision (Note 18.c) (116,058) (36,584) (207,451) (105,780)
2,782,481 2,358,023 3,824,375 3,269,220
80

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
20 Lease Rentals Receivable after one year
From the Balance Sheet date (Note 20 a) 5,651,516 5,090,890 8,064,159 7,403,908
Less: Unearned Income (923,040) (916,054) (1,383,153) (1,391,551)
4,728,476 4,174,836 6,681,006 6,012,357
20 a. Lease Rentals Receivable 5,799,745 5,244,918 8,245,335 7,612,637
Less : Deposit of Rentals (148,229) (154,028) (181,176) (208,729)
5,651,516 5,090,890 8,064,159 7,403,908
21 Lease Rentals Receivable later than five years
From the Balance Sheet date (21 a) 19,737 12,544 19,737 12,544
Less: Unearned Income (1,096) (811) (1,096) (811)
18,641 11,733 18,641 11,733
Less: Provision for Bad & Doubtful Debts - - - -
Interest in Suspense - - - -
18,641 11,733 18,641 11,733
21 a. Lease Rentals Receivable 19,737 12,544 19,737 12,544
Less : Deposits of Rentals - - - -
19,737 12,544 19,737 12,544
22 Investments in Associates and Subsidiaries - Bank
22.a Market Market
Principal Number of % Cost as at Value Number of % Cost as at Value
Activity Shares Holding 31.12.2006 31.12.2006 Shares Holding 31.12.2005 31.12.2005
Rs.’000 Rs.’000 Rs.’000 Rs.’000
Ordinary Shares
Seylan Merchant
Merchant
Bank Ltd Banking 23,071,066 42.88 260,919 173,033 23,071,066 51.84 260,919 149,962
Ceylinco Seylan
Property
Developments Ltd Development 37,206,009 51.02 358,916 306,950 37,191,009 51.15 358,737 306,826
Seylan Bank Asset
Primary
Management Ltd Dealers 14,000,000 100.00 300,000 - 14,000,000 100.00 300,000 -
Debentures
Seylan Merchant Bank Ltd
(50Mn-14%, 60Mn-12.75%,18.724Mn-16% ) 100.00 128,724 - - 100.00 110,000
1,048,559 1,029,656
22.b The holding in Ceylinco Seylan Developments Ltd. is as follows:
Total Number of
Shares of % Cost as at % Cost as at
Ceylinco Seylan Holding 31.12.2006 Holding 31.12.2005
Developments Ltd. Rs.000’ Rs.000’
Ordinary Shares
Direct Holding :
37,206,009 Ordinary shares of Rs.10/- each. 73,982,430 50.29 358,916 50.27 358,737
Indirect Holding :
Shares held through Seylan Merchant Bank Ltd.
1,253,343 Ordinary shares of Rs.10/- each. 73,982,430 0.73 5,760 0.88 6,963
51.02 364,676 51.15 365,700
SEYLAN BANK - Annual Report 2006
81

Notes to the Accounts
22.c The holding in Seylan Merchant Bank Ltd. is as follows:
Total Number of
Shares of % Cost as at % Cost as at
Seylan Merchant Holding 31.12.2006 Holding 31.12.2005
Bank Ltd. Rs.’000 Rs.’000
Ordinary Shares
Direct Holding - Voting
23,071,066 Ordinary shares of Rs.10/- each. 445,031,200 51.84 260,919 51.84 260,919
Direct Holding - Non Voting 100,000,000 - - - -
Total Direct Holding 545,031,200 42.33 260,919 51.84 260,919
Indirect Holding :
Shares held through Seylan Bank Asset
Management Ltd. 3,000,000 Non Voting
Ordinary Shares of Rs.1/- each. 100,000,000 0.55 3,000 - -
42.88 263,919 51.84 260,919
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
23 Investment Properties
Balance as at 01st January 175,264 396,784 1,209,222 1,430,765
Add : Additions during the year 62 - 216,248 5
Less :Transferred to Property, Plant & Equipment - - - (28)
Disposals during the year - (221,520) - (221,520)
Balance as at 31st December 175,326 175,264 1,425,470 1,209,222
Bank has accounted its Investment Properties at cost and depreciation is not required, since these properties consist of
land. Bank revalues these properties periodically on a systematic basis for disclosure purpose.
23.a Investment Properties (Bank) - 2006
Address
Cost/Valuation Market Value
Rs.’000 Rs.’000
Kohalwila Road, Gonawala, Gampaha. 14,098 17,000
Walpolawatte, Kudawaskaduwa, Wadduwa 46,799 47,800
Kahapola, Piliyandala 114,429 144,133
175,326 208,933
23.b Investment Properties (Group) - 2006
Address
Cost/Valuation Market Value
Rs.'000 Rs.'000
SEYLAN BANK - Annual Report 2006
Kohalwila Road, Gonawala, Gampaha 14,098 17,000
Walpolawatte, Kudawaskaduwa, Wadduwa 46,799 47,800
Kahapola, Piliyandala 114,429 144,133
Maradana Road, Borella 11,189 18,250
Halpe Village, Katana 647 647
Dorakumbura, Kurunegala 669 669
Borupana Road, Ratmalana 10,681 10,681
Ceylinco Seylan Towers (West Tower) 1,022,769 1,022,769
90, Galle Road, Colombo 3
No. 257, Union Place, Colombo 2 204,189 204,189
1,425,470 1,466,138
82

Notes to the Accounts
24 Group Balances Receivable
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Name of Company
Seylan Merchant Bank Ltd. 293,897 276,982 - -
Ceylinco Seylan Developments Ltd. 75,874 160,386 - -
Seylan Bank Asset Management Ltd 76 321,606 - -
Total 369,847 758,974 - -
25 Property, Plant & Equipment
Free Hold Lease Hold Free Hold Lease Hold Equipment Motor Leased Capital 31.12.2006 31.12.2005
Bank Land Land Building Building Furniture Vehicles Assets Work in Total Total
Progress
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cost/Valuation
Balance as at
01st January 261,888 8,894 1,061,392 1,948 4,496,163 298,152 61,768 23,708 6,213,913 5,684,085
Additions for the year 8,579 - 5,658 250 419,929 145,329 - 1,615 581,360 606,191
Surplus on revaluation 85,461 13,709 65,972 11,949 - - - - 177,091 -
Disposals (10,139) - - - (24,068) (7,923) (242) - (42,372) (76,363)
Transfers (198) - (557) - 2,480 1,291 (3,016) - - -
As at 31st December 345,591 22,603 1,132,465 14,147 4,894,504 436,849 58,510 25,323 6,929,992 6,213,913
Accumulated Depreciation
Balance as at 01st January - - 63,480 113 3,061,759 130,744 61,768 - 3,317,864 2,898,993
Charge for the year - - 26,720 985 449,376 56,106 - - 533,187 451,376
Revaluation adjustment
on accumulated
depreciation - - (26,708) (833) - - - - (27,541) -
Disposals - - - - (21,688) (6,618) (242) - (28,548) (32,505)
Transfers - - (286) 670 (123) 2,755 (3,016) - - -
As at 31st December - - 63,206 935 3,489,324 182,987 58,510 - 3,794,962 3,317,864
Net book value as at
31.12.2006 345,591 22,603 1,069,259 13,212 1,405,180 253,862 - 25,323 3,135,030 -
Net book value as at
31.12.2005 261,888 8,894 997,912 1,835 1,434,404 167,408 - 23,708 - 2,896,049
1 The Bank carried out a revaluation of its freehold land by a professionally qualified external valuer in the year 2001. Freehold land amounting to
Rs.29,482,901 has been stated at a revalued amount of Rs.107,200,000/=, where the revaluation reserve of Rs.32,217,099 relates to revaluation made in
1993 and the balance of Rs.45,500,000 relates to the year 2001.
The appreciation of land value has been accounted in the Revaluation Reserve.
2 Bank revalued its properties in 2006 which were not revalued for the last 7 years and accounted a revaluation surplus of Rs.204,632,157/- (Refer
Accounting Policies).
SEYLAN BANK - Annual Report 2006
83

Notes to the Accounts
25 Property, Plant & Equipment
Group Free Hold Lease Hold Free Hold Lease Hold Equipment Motor Leased Capital 31.12.2006 31.12.2005
Land Land Building Building Furniture Vehicles Assets Work in Total Total
Progress
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cost/Valuation
Balance as at
01st January 270,720 649,443 1,807,665 1,948 4,695,029 361,889 72,382 24,748 7,883,824 7,312,562
Additions for
the year 8,905 - 6,115 250 447,612 157,504 8,475 1,615 630,476 664,331
Surplus on revaluation 85,460 13,709 65,973 11,949 - - - - 177,091 -
Disposals (15,639) - - - (26,403) (56,042) (4,368) - (102,452) (92,430)
Transfers (198) - (557) - 2,480 (4,906) 3,181 - - -
Transfer from/(to)
Investment Property/
Other Assets - - - - - - - - - (639)
As at 31st December 349,248 663,152 1,879,196 14,147 5,118,718 458,445 79,670 26,363 8,588,939 7,883,824
Accumulated Depreciation
Balance as at 01st January - 7,884 72,662 113 3,128,024 158,453 70,881 - 3,438,017 2,979,504
Charge for the year - 7,884 35,905 985 474,174 59,477 2,776 - 581,201 502,367
Revaluation adjustment
on accumulated
depreciation - - (26,707) (833) - - - - (27,540) -
Disposals - - - - (22,474) (20,517) (4,303) - (47,294) (43,854)
Transfer - - (286) 670 (123) 2,755 (3,016) - - -
As at 31st December - 15,768 81,574 935 3,579,601 200,168 66,338 - 3,944,384 3,438,017
Net book value
as at 31.12.2006 349,248 647,384 1,797,622 13,212 1,539,117 258,277 13,332 26,363 4,644,555 -
Net book value
as at 31.12.2005 270,720 641,559 1,735,003 1,835 1,567,005 203,436 1,501 24,748 - 4,445,807
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
26 Other Assets
Deposits & Prepayments 500,293 319,173 625,619 385,269
Interest Receivable 269,918 364,947 305,709 368,560
Clearing House Balance 1,238,580 888,759 1,238,580 888,759
Due from Gratuity Trust Fund 348,526 325,162 348,526 325,162
Other Assets 1,034,993 1,991,533 1,755,982 2,758,910
3,392,310 3,889,574 4,274,416 4,726,660
SEYLAN BANK - Annual Report 2006
27 Intangible Assets
Goodwill (27.a) - - - (31,553)
Deferred Expenses - - 28,286 -
- - 28,286 (31,553)
84

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
27.a Movement in Goodwill
Goodwill brought forward - - (31,553) (13,243)
Transferred to goodwill - - (263) (26,198)
Reversed to Income Statement - - 263 7,888
Transferred to Retained Profits - - 31,553 -
Goodwill carried forward - - - (31,553)
28 Deposits
Demand Deposits 10,814,107 11,290,482 10,814,107 11,290,482
Savings Deposits 35,576,318 32,991,896 35,576,318 32,991,896
Time Deposits 49,584,930 37,685,494 49,584,930 37,685,494
Certificates of Deposits 4,103,454 3,866,082 4,103,454 3,866,082
100,078,809 85,833,954 100,078,809 85,833,954
28.a Due within one year 77,161,939 63,726,086 77,161,939 63,726,086
Due after one year 22,916,870 22,107,868 22,916,870 22,107,868
100,078,809 85,833,954 100,078,809 85,833,954
28.b Deposits from
Non Bank Customers 98,230,406 83,443,250 98,230,406 83,443,250
Banks 267,646 581,993 267,646 581,993
Finance Companies 1,580,757 1,808,711 1,580,757 1,808,711
100,078,809 85,833,954 100,078,809 85,833,954
29 Borrowings
Call Money Borrowings 2,537,974 3,320,613 2,690,540 3,320,613
Refinance Borrowings 1,215,053 1,263,112 1,312,607 1,297,402
Other Borrowings 327,144 188,451 3,563,845 3,230,993
4,080,171 4,772,176 7,566,992 7,849,008
29.a Due within one year 2,865,121 3,522,606 5,475,271 5,459,688
1 - 5 years - 272,845 871,151 1,408,133
After five years 1,215,050 976,725 1,220,570 981,187
4,080,171 4,772,176 7,566,992 7,849,008
29.b Assets pledged as security
The Bank has not pledged any of its assets to secure liabilities as at 31st December 2006.
30 Group Balances Payable
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Seylan Merchant Bank Ltd. 65,458 38,265 - -
Ceylinco Seylan Developments Ltd. 7,862 120,555 - -
Seylan Bank Asset Management Ltd 412,190 311,333 - -
485,510 470,153 - -
SEYLAN BANK - Annual Report 2006
85

Notes to the Accounts
2006 2005
Temporary Tax Effect Temporary Tax Effect
Difference
Difference
Rs.'000 Rs.'000 Rs.'000 Rs.'000
31 Deferred Taxation
31.a Deferred Assets - Seylan Bank Asset Management Ltd.
Balance brought forward
Increase in Assets - Note 8 29,634 10,372 - -
Reduction in previous year liability (4,691) (1,642) - -
Balance carried forward 24,943 8,730 - -
31.b Deferred Taxation - Bank
Balance brought forward 1,502,143 525,749 1,835,633 550,690
Effect on change of Tax Rate - Note 8 250,357 87,625 - -
Increase/(decrease) in Provision - Note 8 (736,251) (257,688) (83,137) (24,941)
Balance carried forward 1,016,249 355,686 1,752,496 525,749
31.b Deferred Taxation - Group
Balance brought forward 1,502,140 525,749 1,840,657 552,197
Effect on change of Tax Rate - Note 8 251,737 88,108 - -
Increase/(decrease) in Provision - Note 8 (736,251) (257,688) (82,687) (24,806)
Balance carried forward 1,017,626 356,169 1,757,970 527,391
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
32 Other Liabilities
Accrued Expenses & Interest Payable 3,339,739 2,997,870 3,408,924 3,343,007
Deposit Funding Accounts 1,350,668 2,187,953 1,350,668 2,187,953
Dividend Payable 14,442 6,763 14,442 6,942
Provision for Gratuity (32.a ) 855,716 587,622 874,018 604,417
Others 3,487,164 3,229,277 3,950,359 3,198,207
9,047,729 9,009,485 9,598,411 9,340,526
32.a Movement in Gratuity Provision
Balance as at 1st January 587,622 418,261 604,417 434,599
Add : Provision made during the year 321,730 106,127 328,240 113,486
Add : Transferred from Gratuity Trust Fund - 95,784 - 95,784
Less : Transferred to Gratuity Trust Fund - - (4,752) (6,084)
Less : Payments (53,636) (32,550) (53,887) (33,368)
Balance as at 31st December 855,716 587,622 874,018 604,417
SEYLAN BANK - Annual Report 2006
86

Notes to the Accounts
33 Debentures
Bank
Group
Amount
Amount
Year of Redemption Private/Public Bank Outstanding Outstanding
Issue Period Issue Rate as at 31/12/2006 as at 31/12/2006
Annual Monthly Floating Rs.'000 Rs.'000
2002 2002-2007 Public Issue 15% 14% 12% 600,000 600,000
2002 2002-2007 Private Issue 15% 14% 12% 106,970 106,970
2003 2003-2008 Public Issue 10% 9% 12% 1,500,000 1,500,000
2004 2004-2009 Private Issue 12.5% 11.75% - 457,100 457,100
2005 2005-2010 Private Issue 14.5% - - 699,000 699,000
2006 2006-2011 Public Issue 13.5% 13% 12.38% 1,257,315 1,257,315
2006 2006-2011 Private Issue 15% 14% 15.48% 162,250 162,250
Seylan Merchant Bank Ltd
Private Issue - 417,889
Public Issue - 130,499
4,782,635 5,331,023
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
34 Authorised Share Capital
350,000,000 Ordinary Shares of Rs.10/- each 3,500,000 3,500,000 3,500,000 3,500,000
100,000,000 Non-Redeemable, Non-Convertible,
Non-Cumulative, Non Voting, Preference Shares
of Rs.10/- each 1,000,000 1,000,000 1,000,000 1,000,000
300,000,000 Non-Voting Ordinary Shares of Rs.10/- each 3,000,000 3,000,000 3,000,000 3,000,000
7,500,000 7,500,000 7,500,000 7,500,000
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
34.a Issued and Fully Paid
43,560,000 Ordinary Shares of Rs.10/- each (34.b) 435,600 435,600 435,600 435,600
Preference Shares of Rs.10/- each (34.c) 33,901 33,901 33,901 33,901
123,560,000 Non Voting Ordinary Shares
of Rs.10/- each (34.d) 1,235,600 400,000 1,235,600 400,000
1,705,101 869,501 1,705,101 869,501
34.b Ordinary Shares
43,560,000 Ordinary Shares of Rs.10/- each 435,600 435,600 435,600 435,600
34.c Preference Shares
Issued and Fully Paid
Balance as at January 33,901 33,901 33,901 33,901
3,390,100 Preference Shares of Rs.10 /= each 33,901 33,901 33,901 33,901
34.d Non Voting Ordinary Shares
Balance as at January 400,000 400,000 400,000 400,000
Issued during the year 835,600 - 835,600 -
123,560,000 Non Voting Ordinary Shares of Rs.10 /= each 1,235,600 400,000 1,235,600 400,000
SEYLAN BANK - Annual Report 2006
87

Notes to the Accounts
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
35 Statutory Reserve Fund
Balance as at 01st January 377,688 343,296 381,981 347,589
Add : Transferred during the year 43,108 34,392 46,019 34,392
Balance as at 31st December 420,796 377,688 428,000 381,981
36 Reserves
Capital Reserve (36.a) 418,021 418,021 418,021 418,021
Revaluation Reserve (36.b) 282,349 77,717 647,673 528,337
Contingency Reserve (36.c) - 260,000 - 260,000
General Reserve (36.d) 33,787 33,787 33,787 33,787
Share Premium (36.e) 837,319 674,922 837,319 674,922
Capital Redemption Reserve Fund (36.f) - - 258,997 259,785
Reserve on Script Issue - - 3,521 4,311
Retained profits 2,656,500 1,914,643 3,135,694 2,301,229
4,227,976 3,379,090 5,335,012 4,480,392
36.a Movement in Capital Reserve
Balance as at 1st January 418,021 418,021 418,021 418,021
Balance as at 31st December 418,021 418,021 418,021 418,021
36.b Movement in Revaluation Reserve
Balance as at 1st January 77,717 77,717 528,337 891,727
Less: Transferred to/from Revaluation Reserve 204,632 - 119,336 (363,390)
Balance as at 31st December 282,349 77,717 647,673 528,337
36.c Movement in Contingency Reserve
Balance as at 1st January 260,000 260,000 260,000 260,000
Add : Transferred during the year (260,000) - (260,000) -
Balance as at 31st December - 260,000 - 260,000
36.d Movement in General Reserve
Balance as at 1st January 33,787 33,787 33,787 33,787
Balance as at 31st December 33,787 33,787 33,787 33,787
36.e Movement in Share Premium
Balance as at 1st January 674,922 696,234 674,922 696,234
Premium on Non Voting Share issue 208,900 - 208,900 -
Less : Share/Debenture issue expenses (46,503) (21,312) (46,503) (21,312)
Balance as at 31st December 837,319 674,922 837,319 674,922
SEYLAN BANK - Annual Report 2006
36.f Movement in Capital Redemption Reserve Fund
Balance as at 1st January - - 259,785 540,000
Add : Transferred during the year - - - (14,506)
Less : Adjustment on consolidation - - (788) (265,709)
Balance as at 31st December - - 258,997 259,785
88

Notes to the Accounts
37 Commitments and Contingencies
In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with legal
recourse to its customers. No material losses are anticipated as a result of these transactions.
Bank Bank Group Group
2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000
37.a Commitments
Undrawn Credit Lines 4,603,132 3,828,475 4,603,132 3,828,475
Capital Commitments 57,930 69,730 57,930 69,730
37.b Contingencies
Acceptances 4,059,355 5,528,253 4,059,355 5,528,253
Stand by Letters of Credit 347,962 767,195 347,962 767,195
Guarantees 8,011,642 7,428,166 8,034,818 7,483,492
Documentary Credit 3,959,121 4,019,411 3,959,121 4,019,411
Bills for Collection 1,850,756 1,316,352 1,850,756 1,316,352
Forward Exchange Contracts (Net) 34,552 (14,787) 34,552 (14,787)
Custodial Treasury Bonds - - - 381,710
22,924,450 22,942,795 22,947,626 23,379,831
37.c Cases against the Bank
1. Bank filed case bearing No. 128/2001(1) in the Commercial High Court of Colombo against constituent claiming
dues with interest, case to fix for trial on 18/1/2007 and constituent filed action against the Bank in the
Commercial High Court Case No. 14/98 (1) claiming damages that the Bank has rejected further facilities in
wrongful manner. Judgement on 9/3/2005 received against the Bank and both the parties appealed against the
judgement.
2. D C Colombo Case No. 20836/MR legal action initiated by the constituent in respect of fraudulent transactions
carried out from the current account on 30/6/2006. Case withdrawn and paid Rs.2.5 Mn as full and final
settlement.
3. Labour Tribunal Applications have been filed by employees of the bank who had been terminated under LT Case
Nos :
(a) Colombo Case No 1/377/97 - Further cross examination 4/1/2007
(b) Case No. 13/181/2001 - Trial on 25/1/2007
(c) Case No. 13/294/2001 - Trial on 2/2/2007
(d) Case No. 88/2003
- Order on 2/3/2006 (H.C. Kandy)-Appeal dismissed
4. Action No. 18399/MR in D C Colombo has been filed by a constituent of BCCI claiming the proceeds of a dollar
draft deposited in his rupee account which has been seized by the liquidator of BCCI. Evidence concluded. Order
delivered against the Bank. Bank lodged an appeal in the Court of Appeal under Case Nos. CA (Rev)1788/04 & CA
(NIT) 91/04. Fixed for argument on 7/2/2007.
5. D C Colombo Case No. 12820 transferred to the Commercial High Court of Colombo Case No. 157/2001 (1). The
company has filed action against the Bank with regard to dishonouring a guarantee issued by BCCI. Fixed for
judgment 20/2/2007.
6. Case No. 137/99 (1) in Commercial High Court of Colombo filed against the Bank by joint deposit holders claiming
the bank has no right to utilise the dividends of deposit held under lien. Trial concluded on 14th September 2006.
Ordered to file written submission at the Registry.
SEYLAN BANK - Annual Report 2006
89

Notes to the Accounts
7. D C Negombo Case No. 2178/SPL case filed by liquidator of a company claiming the Bank has wrongfully utilised
the funds for outstanding after initiating winding up proceedings.
After inquiry, court held against the Bank. Appeal lodged (Case No. CALA 2/2002). Case has been re-fixed for
argument on 25/5/2007.
8. D C Colombo Case No. 15958/M. A Company has filed a case that the Bank has honoured a guarantee wrongfully
and claiming the same. Appeal pending. Case fixed for 17/1/2007 for inquiry by written submissions.
9. Legal action instituted by a constituent in D C Chilaw under Case No. 312/M in respect of payment of cheques.
Further trial 8/1/2007.
10. Our constituent has filed action in the Commercial High Court of Colombo under Case No. H C (Civil) 172/01 (1)
against the Bank alleging fraudulent transactions effected to his current account by his partner with the
knowledge of the Bank. Case is fixed for settlement on 7/2/2007.
11. CHC 124/2002 (1)-customer has filed a case claiming damages from the Bank for transferring funds without
authorization. Case was withdrawn by Plaintiff.
12. D C Mt Lavinia Case No. 4246/03/M plaintiff claiming damages for executing the writ in D C Mt Lavinia Case No.
1585/98/M in her premises. The court ordered to lay by the Case No. 4246/03/M until the claim Case No. 234/CL is
concluded. The plaintiff of the Case No. 4246/M has filed another case against Seylan Bank claiming the assets
seized belonged to her and said case is re-fixed for inquiry on 5/4/2007.
There are no uncertain factors which may effect the future outcome and we cannot make any estimate with
regard to the financial effect.
38. Capital Commitments
Capital expenditure approved by the Board of Directors for which provision has not been made in these accounts
amounted to approximately -
Bank Bank Group Group
2006 2005 2006 2005
Rs. Rs. Rs. Rs.
Approved and Contracted for 57.93Mn. 69.73Mn. 57.93Mn. 69.73Mn.
Approved but not Contracted for 176.10Mn. 166.423Mn. 176.10Mn. 166.423Mn.
39 Post Balance Sheet Events
Subsequent to the date of the Balance Sheet, no circumstances have arisen which would require adjustments to or
disclosure in the financial statements, except for what is given below.
SEYLAN BANK - Annual Report 2006
Directors have recommended a Preference dividend of Rs. 1.14 per share and Ordinary dividend of Rs. 1.50 per share for
the year ended December 31, 2006 (Preference dividend of Rs. 0.87 per share and Ordinary dividend of Rs. 2.00 per share in
2005), which will be decided at the next Annual General Meeting.
In accordance with Sri Lanka Accounting Standard No 12 – (Revised) Events After the Balance Sheet Date, this proposed
final dividend has not been recognized as a liability as at December 31, 2006.
Total Capital Adequacy ratio as at 31st December 2006 is 9.89% and is below the statutory requirement of 10%. To bridge
the short fall in capital of Rs.100 Mn, the Bank is proceeding with a quoted debenture issue of 5 Mn. Unsecured
Subordiated Redeemable Debentures of Rs.100/- each amounting to Rs.500 Mn. extendable upto Rs.1 Billion (10 Mn.
debentures of Rs.100/- each) in the event of an over subscription.
Mr. J.E.P. De Silva resigned from the Board with effect from 11th May 2007 and Mr. J.G.S. De Silva was appointed to the
Board with effect from the said date.
90

Notes to the Accounts
40 DIRECTOR’S INTEREST IN CONTRACTS WITH THE COMPANY
a. Deshamanya Dr. Lalith Kotelawala, Mr. R. Renganathan, Ms. M. Sabaratnam, Mrs. S.P.C. Kotelawala and
Mr. K.A.S. Jayatissa who are Directors of the Bank, are also Directors of Sarana International (Pvt.) Ltd for which the
Bank has Contributed Rs.19,689,190/- and made Rs.240,000 for group expenses, sponsorships and miscellaneous
expenses during the year.
b. Investments made by Directors in Seylan Bank Ltd Debentures.
Rs.
Mrs. S.P.C. Kotelawala 1,500,000
Mr. A. M Pasqual 210,000
c .
Accommodation Granted to Directors for Credit Cards
Name of Director Credit Card Limit (Rs.) Security Type
Deshamanya Dr. Lalith Kotelawala 14,000,000 a)
Mrs. S.P.C. Kotelawala 14,000,000 a)
Mr. R. Renganathan 950,000 b)
Mr. A. M. Pasqual 500,000
Mr. A.D. Jegasothy 1,000,000 c)
Mr. S.K.M. Perera 500,000
Ms. M. Sabaratnam 1,000,000 d)
Dr. P.R. Anthonis 500,000
Mr. S.C.O. De Livera 500,000
Mr. J E.P.A. De Silva -
Mr. K.A.S. Jayatissa 5,500,000 e)
Mr. P.T. Sirisena 500,000
a) Rs.0.5 Mn. clean and the balance was secured on cash deposits amounting to Rs.6.0 Mn. & GBP 56,250.
b) Rs.0.5 Mn. clean and the balance was secured on cash deposits amounting to Rs.0.521 Mn.
c) Rs.0.5 Mn. clean and the balance was secured on cash deposits amounting to Rs.0.556 Mn.
d) Rs.0.5 Mn. clean and the balance was secured on cash deposits amounting to Rs.1 Mn.
e) Rs.0.5 Mn. clean and the balance was secured on cash deposits amounting to Rs.6 Mn.
d. Other Accommodation Granted to Directors
Mrs. S.P.C.Kotalawala was granted a permanent overdraft facility of Rs.0.5 Mn. against Non Resident Foreign Currency
Deposits. However, this facility has not been utilised during the year.
Mr. A.M.Pasqual was granted total credit facilities of Rs.11 Mn. as housing loans against property mortgaged,
Rs.3.0 Mn. credit facility as a special housing loan against foreign currency deposits and Rs.2.75 Mn. credit facility
granted against Employee Provident Fund balance during the year.
e. Compensation to Directors (Key Management Personnel) Rs.
Short term employee benefits 44,223,404
Rs.
f. Transactions by Close Relations of Directors
Total accommodation granted 9,644,730
Total Investment in Seylan Bank Ltd Debentures 240,000
g. All the other interests of each Director, direct or indirect in financial and other arrangements are disclosed under
Note 41, related party transactions.
SEYLAN BANK - Annual Report 2006
91

Notes to the Accounts
41 Related Party Transactions
The Bank had the following financial dealings during the year 2006 with companies which are considered related parties and unless otherwise stated, transactions were carried out in the ordinary
course of business on an arms length basis at commercial rates with the companies mentioned below. The parties given below are considered related mainly due to significant influence arising
as a result of common directorships and through shareholdings. These companies, names of the Directors and the nature of transactions entered into are listed below:
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco
Deshamanya
Insurance Co. Ltd. Dr. Lalith Kotelawala Chairman Overdraft 87.250 42.636 Insurance premium 68.348
Mrs. S. P. C. Kotelawala Director Donation 0.500
Mr R. Renganathan Joint Chief Guarantee 0.500 10.124 Other reimbursement expenses 1.521
Executive 87.750 42.636 10.124
Director
Mr. A. D. Jegasothy Director
- 70.369
Insurance Claim 1.242
Lien over Rupee Fixed Deposits for Rs.81.106Mn Service Charges Recovered 3.074
Company’s investment in Seylan Bank debentures Bancassurance income received 10.392
amounted to - Rs.459.590 Mn. 14.708
Ceylinco Securities & Deshamanya Professional fees & registrars fees
Financial Services Ltd. Dr. Lalith Kotelawala Chairman O/A Debentures issue 0.365
Mrs. S.P.C. Kotelawala Director
Mr. J.E.P.A. De Silva Director 0.365
Mr. S.K.M. Perera Director
Service charges recovered 0.011
0.011
Blue Diamonds Jewellery Deshamanya
Worldwide Ltd. Dr. Lalith Kotelawala Chairman Overdraft 205.400 204.282 0.531USD
Mrs. S.P.C. Kotelawala Director Guarantee 0.015
Mr. A.D. Jegasothy Director Term Loan 73.228 73.228
278.628 277.510 0.015 - 0.531 USD
Secured on stock of jewellery worth $2.235Mn.
Cumulative Bad and Doubtful Debt provision made was $2.565 Mn. as at year end.
The Golden Key Credit Deshamanya
Card Company Ltd. Dr. Lalith Kotelawala Chairman Overdraft 10.000 4.713 Sponsorship of Goldenkey Theme Night 0.110
Mrs. S.P.C. Kotelawala Director Term Loan 0.006 Call Centre Expenses 0.907
Mr. S.K.M. Perera Director Printing Charges 0.017
Mr. A.D.Jegasothy Director Card Commission 0.014
Registered Office Expenses 0.060
10.000 4.719 - - -
1.108
Secured on Primary mortgage bond for Rs.15 Mn. over Ceylinco Centre building.
Secondary mortgage bond for Rs.25.0 Mn. over same property.
Company’s investment in Seylan Bank debentures amounted to Rs.6 Mn.
Service Charges Recovered 0.003
0.003
SEYLAN BANK - Annual Report 2006
Middleway Ltd.
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.009 Group Expenses 5.000
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director 5.000
0.009 - - -
Lien over Rupee Fixed Deposits for Rs.2.295 Mn. belonging to The Finance Co. Ltd
92

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
The Finance
Deshamanya
Company Ltd. Dr. Lalith Kotelawala Chairman Overdraft 58.550 63.834 Card Commission 0.197
Mrs. S.P.C. Kotelawala Director Leasing 38.675 38.675 Transfer of Funds for Loan settlement 4.325
Mr. A.D. Jegasothy Director Piyasa W’Niwasa 136.030 136.030 Payment made through Company for
Mr. S.K.M. Perera Director purchases of asset 15.995
Ms. M. Sabaratnam Director 20.517
Mr. K.A.S.Jayatissa Director 233.255 238.539 - - -
Overdraft -Mortgage over property for Rs.31.4 Mn. Service Charges Recovered 0.120
Lease - Absolute ownership over leased assets.
Lien over Rupee Fixed Deposits for Rs.2.277 Mn.
Piyasa W’Niwasa - Primary Mortgage bond Rs.160.21 Mn.
Proceeds from sale of investment property Rs.137.5 Mn. 0.120
Ceylinco CISCO Security Deshamanya
Corporation (Pvt.) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 46.390 40.034 Security services 0.298 99.092
Mrs. S.P.C. Kotelawala Director Term Loan 0.006 Consultancy Fees 0.391
Mr. A.D. Jegasothy Director Guarantees 0.410 0.684 Installation & servicing charges 0.089
Professional Fees 0.531
Group Expenses 5.000
46.800 40.040 0.684 - - Other reimbursement expenses 3.097
Lien over Rupee Fixed Deposits for Rs.37.488 Mn. 0.298 108.200
Ceylinco Ltd.
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 10.000 13.504 Furniture & Office Equipment 0.129
Mrs. S.P.C. Kotelawala Deputy Group Expenses 1.425
Chairperson Term Loan 25.637 25.637 Courier Charges 0.384
Mr. R. Renganathan Director Guarantees 0.241 Rent 1.314
Service Charges 0.393
3.645
35.637 39.141 0.241 - -
Mortgage over 1,587,398 shares of Ceylinco Insurance Co Ltd. Service Charges Recovered 0.014
0.014
Ceymo Automobile Mr. A.D. Jegasothy Director Overdraft 0.021
Manufactures (Pvt.) Ltd.
0.021 - - -
Ceylinco Land
Deshamanya
Exchange (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 14.400 12.441 Service charges recovered 0.002
Mrs. S.P.C. Kotelawala Director 0.002
14.400 12.441 - - -
Lien over Rupee Fixed Deposits for Rs.17.762 Mn.
Ceylinco PLC
Deshamanya
Technology (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 4.000 4.023 Loyalty Card Commission 1.378
Mrs. S.P.C. Kotelawala Director Term Loan 4.000 4.000
Mr. R. Renganathan Director 1.378
Mr. A.D. Jegasothy Director
8.000 8.023 - - -
Lien over Rupee Fixed Deposits for Rs.5.0 Mn. belonging to Ceylinco
International Reality (Pvt) Ltd.
Lien over Rupee Fixed Deposits for Rs.5.0 Mn. Service Charges Recovered 0.001
0.001
Ceylinco Worldwide Deshamanya
Trading (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 0.513 0.724
Mrs. S.P.C. Kotelawala Director
0.513 0.724 - - -
Lien over Rupee Fixed Deposits for Rs.0.569 Mn.
SEYLAN BANK - Annual Report 2006
93

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Independent Financial Deshamanya
News & Views (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 1.552 1.577 Press advertising in Aratuwa, 2.047
Mrs. S.P.C. Kotelawala Director Sarisara & Dahena newspapers
Mr. K.A.S. Jayatissa Director & subscription for Aratuwa
1.552 1.577 - - -
Lien over Rupee Fixed Deposits for Rs.1.798 Mn. 2.047
Key Research & Deshamanya
Information Ltd. Dr. Lalith Kotelawala Chairman Conducting market research & staff survey 4.132
Mrs. S.P.C. Kotelawala Director Professional fees 0.025
Mr. S.K.M. Perera Director
4.157
Ceylinco Swiftcare Deshamanya
(Pvt) Ltd. Dr. Lalith Kotelawala Chairman Overdraft 0.034 Medical Expenses 1.775
Mrs. S.P.C. Kotelawala Director Directors Emoluments 0.259
Mr. A.D. Jegasothy Director Other Expenses 0.327
0.034
2.361
Golden Key Software Deshamanya
Solutions Ltd. Dr. Lalith Kotelawala Chairman Computer Software 16.682
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director
16.682
Ceylinco Tax &Financial Deshamanya
Consultants (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Leasing 1.187 1.187 Consultancy Payments 0.343 0.742
Mrs. S.P.C. Kotelawala Director Salaries & Staff related expenses 2.749
Ms. M. Sabaratnam Director 1.187 1.187 - - -
Mr. K.A.S. Jayatissa Director Secured on ownership of leased assets. 0.343 3.491
Service Charges Recovered 0.080 0.626
0.080 0.626
M/s De Livera Associates Mr S. C. O. De Livera Senior Partner Lawyers Fees 5.322
(Partnership). 5.322
Ceylinco Hotels Ltd.
Deshamanya
Dr. Lalith Kotelawala Chairman Letter of Credit 3.134 Providing of Meals & Refreshments 12.570
Mrs. S.P.C. Kotelawala Director Guarantees 0.120 Donations 0.027
Mr. R. Renganathan Director 3.254 Director’s Emoluments 0.030
Cash Margin for Rs.1.510 Mn. 12.627
SEYLAN BANK - Annual Report 2006
Ceylinco Consultancy & Deshamanya
Allied Services (Pvt ) Ltd. Dr. Lalith Kotelawala Chairman Consultancy Services 0.721
Mrs. S.P.C. Kotelawala Director Director’s Emoluments 0.225
Mr. R. Renganathan Director Legal Fees 0.033
Ms. M. Sabaratnam Deputy Chairperson Group expenses 0.750
Mr. K.A.S. Jayatissa Director Cash Transport & Cash Sorting Expenses 1.790
3.519
The Golden Key Co. Ltd.
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.091 Computer Software/Hardware Purchases 51.985
Mrs. S.P.C. Kotelawala Director Letter Credit 3.347 Installation & Service Charges 6.250
Mr. S.K.M. Perera Director - 0.091 3.347 - - Computer related expenses 11.762
Mr. A.D. Jegasothy Director 69.997
94

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Bio-Tech Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.810
Mrs. S.P.C. Kotelawala Director
0.810
Ceylinco Networking Deshamanya
Technologies Ltd. Dr. Lalith Kotelawala Chairman Installation & Servicing Charges 10.262
Mrs. S.P.C. Kotelawala Director Computer software Purchases 3.462
Mr. S.K.M. Perera Deputy Chairman Service Agreement 0.518
14.242
Ceylinco Tourist Deshamanya
Hotels Ltd Dr. Lalith Kotelawala Chairman Entertainment Expenses 0.010
Mrs. S.P.C. Kotelawala Deputy Chairperson
Ms. M. Sabaratnam Director
Mr. R. Renganathan Director 0.010
Ceylinco Travels & Deshamanya
Tours Ltd. Dr. Lalith Kotelawala Chairman Overdraft 0.198 Air ticket & visa fees 2.345
Mrs. S.P.C. Kotelawala Director Training & Other expenses 4.143
Mr. S.K.M. Perera Director Office Furniture 0.047
0.198
6.535
Ceylinco CISCO Security Deshamanya
Transport & Allied Dr. Lalith Kotelawala Chairman Overdraft 0.104 Cash transport expenses 0.066 36.241
Services (Pvt) Ltd. Mrs. S.P.C. Kotelawala Director Cash sorting charges 1.092
Mr. A.D. Jegasothy Director 0.104 Security Services 0.095
Installation & Other Charges 0.008
0.066 37.436
Ceylinco Consolidated Deshamanya
(Pvt) Ltd. Dr. Lalith Kotelawala Chairman Directors’ pension scheme 1.759
Mrs. S.P.C. Kotelawala Director Professional fees 1.367
Mr. R. Renganathan Director Group expenses 30.447
Ms. M. Sabaratnam Director
Mr. K.A.S. Jayatissa Director
Mr. S.K.M. Perera Director
Mr. A.D. Jegasothy Director 33.573
The Golden Key Card Deshamanya
Technologies Ltd. Dr. Lalith Kotelawala Chairman Printing of IDs 0.146
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director 0.146
Ceylinco International Deshamanya
Trading Company Ltd. Dr. Lalith Kotelawala Chairman Reimbursement of work orders 0.093
Mrs. S.P.C. Kotelawala Director Guarantee 2.000 1.000 0.093
Mr. A.D. Jegasothy Director
2.000 - 1.000 - - Service Charges Recovered 0.038
Lien over Repo for Rs.1.1 Mn. 0.038
Lien over Fixed Deposits for Rs.1.541 Mn.
SEYLAN BANK - Annual Report 2006
95

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Industries Deshamanya
(Pvt) Ltd. Dr. Lalith Kotelawala Chairman Furniture & office equipment 5.465
Mrs. S.P.C. Kotelawala Director Letter of Credit 2.497 5.465
Service charges recovered 0.003
- - 2.497 - -
0.003
Ceylinco Computer Deshamanya
Forms (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Letter of Credit 10.000 4.292 Printing Charges 15.961
Mrs. S.P.C. Kotelawala Director Revolving Import 2.000 2.000
Loans 15.961
12.000 2.000 4.292 - -
Assignment over sales proceeds from Seylan Bank Ltd.
Secured on Mortgage over printing machinery for Rs.2.0 Mn.
C A S Recoveries & Mr. K.A.S Jayatissa Director Credit card recovery expenses 0.642
Custodial Services 0.642
(Pvt) Ltd
Ceylinco Printing & Deshamanya
Stationery (Pvt) Ltd. Dr. Lalith Kotelawala Chairman Printing charges 16.527
Mrs. S.P.C. Kotelawala Director 16.527
Asian Finance Ltd.
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 9.593 22.185 Holding rental at Kotta Park 0.100
Mrs. S.P.C. Kotelawala Director 0.100
9.593 22.185 - - - Service Charges Recovered 0.067
0.067
Secured on primary mortgage bond for Rs.10.098 Mn.
Ceylinco Packaging Deshamanya
Company Ltd. Dr. Lalith Kotelawala Chairman Overdraft 10.000 10.198
Mrs. S.P.C. Kotelawala Director Leasing 11.754 11.754
21.754 21.952 - - -
Secured on 440,000 shares of Ceylinco Insurance Co Ltd &
absolute ownership of leased assets.
American Education Deshamanya
Centre Ltd. Dr. Lalith Kotelawala Chairman Leasing 4.385 4.385 Service Charges Recovered 0.067
Mrs. S.P.C. Kotelawala Director Overdraft 1.836
Mr. K.A.S. Jayatissa Director 0.067
Mr. A.D. Jegasothy Director 4.385 6.221 - - -
Absolute ownership of leased assets.
SEYLAN BANK - Annual Report 2006
Ceylinco Internet Deshamanya
Services Ltd Dr. Lalith Kotelawala Chairman Guarantees 0.407
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director 0.407
Cash Margin for Rs.1.115 Mn.
Blue Diamonds Ltd Deshamanya
Dr.Lalith Kotelawala Chairman Guarantees 6.000
Mrs. S.P.C. Kotelawala Director
- - 6.000 - -
Secured on primary mortgage bond for Rs.45.0 Mn. over property.
96

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Grameen Deshamanya
Credit Co Ltd Dr. Lalith Kotelawala Chairman Overdraft 85.000 79.472 Salaries 1.504
Mrs. S.P.C. Kotelawala Director Purchase of Tikiri bags 4.225
Mr. A.D. Jegasothy Director Commission paid 0.001
Mr. K.A.S. Jayatissa Director Group Expenses 0.700
85.000 79.472 - - -
Securitization of Loan receivables for Rs.85.0 Mn. over a performing 1.504 4.926
loan portfolio of Rs.369.0Mn.
Ceylinco Investments & Deshamanya
Realty (Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 6.969
Mrs. S.P.C. Kotelawala Director
Ms. M. Sabaratnam Director - 6.969 - - -
Mr. K.A.S. Jayatissa Director
Ceylinco
Deshamanya
Developers Ltd Dr. Lalith Kotelawala Chairman Overdraft 9.000 3.790 Purchase of a house for the Seylan Grameen 3.472
Mrs. S.P.C. Kotelawala Director Fixed Deposits Draw & sponsorship expenses
9.000 3.790
3.472
Lien over Fixed Deposits for Rs.11.475 Mn.
Sesot (Pvt) Ltd Trustees of the Company Term Loan 44.000 7.844
Overdraft 0.004
44.000 7.848 - - -
Seybest (Pvt) Ltd Trustees of the Company Term Loan 55.100 34.953
Overdraft 0.002
55.100 34.955 - - -
Seyshop (Pvt) Ltd Trustees of the Company Term Loan 55.100 34.988 Credit facilities have been allowed at preferential
Overdraft 0.002 rates of interest since these facilities were utilised
55.100 34.990 - - - to purchase shares which are allotted to the
employees in proportion to their gratuity.
Sotse (Pvt ) Ltd Trustees of the Company Term Loan 38.800 31.594
Overdraft 0.002
38.800 31.596 - - -
Esot (Pvt) Ltd Trustees of the Company Term Loan 54.600 35.483
Overdraft 0.002
54.600 35.485 - - -
Seyfest (Pvt) Ltd Trustees of the Company Term Loan 14.000 -
14.000 - - - -
Ceylinco Seylan Deshamanya
Developments Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.026 Rent 82.145
Mrs. S.P.C. Kotelawala Director Leasing 0.838 0.838 Reimbursement of work orders 1.400
Mr. R. Renganathan Director Guarantee 10.245 Electricity 52.401
Mr. A.D. Jegasothy Director Water 1.494
0.838 0.864 10.245 - - Rates 2.314
Insurance 4.848
Secured on primary mortgage bond for Rs.150 Mn., Secondary mortgage Deposit made for Rent & Security 75.000
bond for Rs.150 Mn. over leasehold property & absolute ownership
of the assets.
During the year, Bank purchased shares of Ceylinco Seylan Developments Ltd
amounting to Rs.0.179 Mn 219.602
During the year, Rs.14.881 Mn was received as dividend Income.
Service Charges Recovered 3.049
3.049
SEYLAN BANK - Annual Report 2006
97

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Seylan Merchant Deshamanya
Bank Ltd Dr. Lalith Kotelawala Chairman Overdraft 7.000 6.674 Fees for Parking Vehicle 0.419
Mrs. S.P.C. Kotelawala Director Treasury Loan 198.000 197.500 0.419
Mr. R. Renganathan Director Term Loan 0.001
Dr. P.R. Anthonis Director
Mr. K.A.S. Jayatissa Director 205.000 204.175 - - -
Mr. A.D. Jegasothy Director
* Mortgage over 2,402,000 shares of Blue Diamonds. Dividend Income Received 4.614
* Irrevocable Power of Attorney over lease agreements totalling to Rs.220.90Mn. Interest Income 5.262 39.677
* Reverse Repo Rs.84.402 Mn. Other Income 0.163
5.262 44.454
Seylan Bank Asset Mr. R. Renganathan Director Card Commission 0.007
Management Ltd Ms. M. Sabaratnam Director Interest Expenses 20.944
Mr. A.M. Pasqual Director 20.951
Repo Liability Rs.409.957 Mn.
Interest Income 6.680
Commission Income 0.049 1.582
0.049 8.262
Ceylinco Cisco Deshamanya
Technology & Dr. Lalith Kotelawala Chairman Overdraft 0.402 Central Alarm Monitoring Charges 0.081
Consultancy Mrs. S.P.C. Kotelawala Director Installation & Other Charges 0.005 1.927
(Pvt) Ltd. 0.402
0.005 2.008
Ceylinco Express Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 3.500 3.897 Courier charges 0.012 6.463
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director 3.500 3.897 - - -
Lien over Rupee Fixed Deposits for Rs.3.520 Mn. 0.012 6.463
Service Charges Recovered 0.040
0.040
eCeylinco.com Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.001 Payment made for development of web page 0.212
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director 0.212
Mr. A.D. Jegasothy Director 0.001
Mr. S.K.M. Perera Director
CTV Creations (Pvt) Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman
Mrs. S.P.C. Kotelawala Director Advertising expenses 35.418
Mr. K.A.S. Jayatissa Director
35.418
SEYLAN BANK - Annual Report 2006
Ceylinco Maini (Pvt) Ltd
International College of
Business Technology Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.602
Mrs. S.P.C. Kotelawala Director
- 0.602 - - -
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 1.090 2.650
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director 1.090 2.650 - - -
Mr. R. Renganathan Director
Lien over Rupee Fixed Deposits for Rs.1.487 Mn.
98

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Freight
International (Pvt) Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 6.500
Mrs. S.P.C. Kotelawala Director Guarantees 2.025 2.300
Mr R. Renganathan Director 8.525 - 2.300
Lien over Rupee Fixed Deposits for Rs.5.571 Mn.
Ceylinco International Deshamanya
Realty (Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft - 3.422
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director 3.422
Ms. M. Sabaratnam Director
F&G Management Deshamanya
Services (Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 1.620 1.423
Mrs. S.P.C. Kotelawala Director
Ms. M.Sabaratnam Director 1.620 1.423
Mr. K.A.S.Jayatissa Director
Lien over Rupee Fixed deposits for Rs.1.8 Mn.
Ceylinco Capital Deshamanya
Investment Co (Pvt) Ltd Dr. Lalith Kotelawala Chairman Card Commission 0.063
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director
0.063
Ceylinco Real Estate Deshamanya
Developers Ltd Dr. Lalith Kotelawala Chairman
Mrs. S.P.C. Kotelawala Director Term Loan 74.400 74.400
Leasing 0.569 0.569
74.969 74.969 - - -
Primary mortgage bond for Rs.90.0 Mn. over property.
Society - Love and Deshamanya
Understanding Dr. Lalith Kotelawala Chairman Overdraft 0.450 Group expenses 3.620
(SOLO-U) Mrs. S.P.C. Kotelawala Director Leasing 4.770 4.770 Legal fees 0.030
Mr. R. Renganathan Director Donation 2.000
Mr. A.D. Jegasothy Director 4.770 5.220 - - -
Ms. M. Sabaratnam Director 5.650
Mr. S.K.M. Perera Director Absolute ownership of leased assets.
Mr. K.A.S. Jayatissa Director
Cisco Information Deshamanya
Security Services Dr. Lalith Kotelawala Chairman Training 0.028
(Pvt) Ltd Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
Mr. A.M. Pasqual Director
0.028
Ceylinco Group Deshamanya
Libraries Ltd Dr. Lalith Kotelawala Chairman Library books 2.100
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
Mr. K.A.S. Jayatissa Director
Ms. M. Sabaratnam Director 2.100
Mr. A.D. Jegasothy Director
Mr. S.K.M. Perera Director
SEYLAN BANK - Annual Report 2006
99

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco GemCorp Deshamanya
International Ltd Dr. Lalith Kotelawala Chairman Sponsorships for Gem & Jewellery Show 0.350
Mrs. S.P.C. Kotelawala Director
Mr. K.A.S. Jayatissa Director
0.350
Ceylinco Grameen Deshamanya
Automobiles (Pvt) Ltd Dr. Lalith Kotelawala Chairman Vehicle Maintainance 0.039
Mrs. S.P.C. Kotelawala Director Purchase of Vehicles 7.859
7.898
Ceylinco CISCO Ranaviru Deshamanya
Services (Pvt) Ltd Dr. Lalith Kotelawala Chairman Emoluments 1.000
Mrs. S.P.C. Kotelawala Director
Mr. K.A.S. Jayatissa Director
Mr. A.D. Jegasothy Director
Mr. S.K.M. Perera Director 1.000
South Asian Travels Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 40.000 2.259
Mrs. S.P.C. Kotelawala Director Guarantees 0.092
Mr. S.K.M Perera Director 40.000 2.259 0.092
Ceylinco Seylan Housing Deshamanya
& Commercial Dr. Lalith Kotelawala Chairman Term Loan 48.649 48.649
Properties Ltd Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
Ms M. Sabaratnam Director
Mr. A.M. Pasqual Director 48.649 48.649
Mr. K.A.S. Jayatissa Director
Primary Mortgage totaling to Rs.50 Mn. over immovable property.
Ceylon Sapphire Council Deshamanya
Dr. Lalith Kotelawala Director Guarantees 0.048
0.048
Seylan Merchant Deshamanya
Leasing Ltd Dr. Lalith Kotelawala Chairman Overdraft 5.000 Card Commission 0.004
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
Mr. K.A.S. Jayatissa Director 5.000
Mr. A.D. Jegasothy Director 0.004
Ms. M. Sabaratnam Director
Ceylinco Cisco Cash Deshamanya
Management & Transit Dr. Lalith Kotelawala Chairman Overdraft 0.322 Security Charges 5.469
Company (Pvt) Ltd. Mrs. S.P.C. Kotelawala Director 0.322
5.469
SEYLAN BANK - Annual Report 2006
100
IC & CS Software Deshamanya
Solutions(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 2.100 2.074 0.158
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Deputy Chairman
Mr. S.K.M. Perera Director
Mr. P.T. Sirisena Director 2.100 2.074 0.158
Lien over exporters foreign currency for USD 11,098/-
Ceylinco Healthcare Deshamanya
Services Ltd Dr. Lalith Kotelawala Chairman Letter of Credit 198.714 Medical Expenses 1.507
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Deputy Chairman 1.507
Ms M. Sabaratnam Director 198.714 Service Charges Recovered 0.005
0.005
20% margin held in Treasury Bonds.

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Golden Key International Deshamanya
Trading Co Ltd. Dr. Lalith Kotelawala Chairman Tikiri gifts purchased 2.400
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera. Director
2.400
Ceylinco Prosperity Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Land purchased for settlement of Piyasa Loan 1.289
Mrs. S.P.C. Kotelawala Director
Ms. M. Sabaratnam Deputy
Chairperson
Mr. K.A.S. Jayatissa. Director
1.289
Ceylinco Savings Deshamanya
Bank Ltd Dr. Lalith Kotelawala Chairman Card Commission 0.012
Mrs. S.P.C. Kotelawala Joint Deputy
Chairperson
Mr. R. Renganathan Joint Deputy
Chairman 0.012
Mr. A.D. Jegasothy Director
Ms. M. Sabaratnam Director
Mr. S.C.O. De Livera Director
Mr. K.A.S. Jayatissa. Director
Ceylinco Tomei Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Purchase of jewellery for Cool Cash draw 0.127
Mrs. S.P.C. Kotelawala Deputy
Chairperson 0.127
Ceylinco Renewables Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.293 Installation of solar home system 0.112
Mrs. S.P.C. Kotelawala Deputy
Chairperson
Mr. K.A.S. Jayatissa Director 0.293
0.112
Economic Resurgence Deshamanya
Association (Pvt) Ltd Dr. Lalith Kotelawala Chairman Group Expenses 2.640
(E.R.A) Mrs. S.P.C. Kotelawala Director
Mr. K.A.S. Jayatissa Director 2.640
Ceylinco Lexcon services Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Sundry Expenses 0.086
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
Ms. M. Sabaratnam Director 0.086
Ceylinco Grameen Deshamanya
E-Commerce (Pvt) Ltd Dr. Lalith Kotelawala Chairman Reimbursement of work orders 0.017
Mrs. S.P.C. Kotelawala Director Vehicle Mainteinance 0.013
0.030
Ceylinco Consolidated Deshamanya
Overseas (Pvt) Ltd Dr. Lalith Kotelawala Chairman Advance Payment 30.000
Mrs. S.P.C. Kotelawala Director
30.000
SEYLAN BANK - Annual Report 2006
101

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
The Finance & Guarantee Deshamanya
Company Ltd Dr. Lalith Kotelawala Chairman Overdraft 6.193
Mrs. S.P.C. Kotelawala Director
Ms. M. Sabaratnam Director
Mr. K.A.S. Jayatissa Director 6.193
Ceylinco Housing Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 4.500 2.191
Mrs. S.P.C. Kotelawala Director
4.500 2.191
Lien over Rupee Fixed Deposits for Rs.5.7 Mn.
Ceylinco Automobiles Ltd Deshamanya
Dr. Lalith Kotelawala Chairman Letter of Credit 10.821
Mrs. S.P.C. Kotelawala Director Overdraft 1.967
Mr. R. Renganathan Director
1.967 10.821
Cash Margin Rs.2.1 Mn.
Lien over Rupee Fixed Deposits for Rs.10.0Mn. belonging to Seylan Marchant Bank Ltd.
Lien over Rupee Fixed Deposits for Rs.1.0 Mn.
Ceylinco Finance & Deshamanya
Infrastructure Ltd Dr. Lalith Kotelawala Chairman Letter of Credit 0.640
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director 0.640
Mr. K.A.S. Jayatissa Director
Green Agro Lanka Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.261
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director
0.261
St. Nicholas Education Deshamanya
Services Ltd Dr. Lalith Kotelawala Chairman Overdraft 3.466 0.275
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director
Mr. S.K.M. Perera. Director 3.466 0.275
Ceylinco Investment Deshamanya
Company Ltd Dr. Lalith Kotelawala Chairman Group expenses 75.200
Mrs. S.P.C. Kotelawala Director Foreign affairs expenses 6.000
Mr. A.D. Jegasothy Director Directors emoluments 0.006
81.206
SEYLAN BANK - Annual Report 2006
Ceylinco Foliage Exports Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.789
Mrs. S.P.C. Kotelawala Director
0.789
TFC Homes (Pvt) Ltd. Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 27.500 4.701
Mrs. S.P.C. Kotelawala Director
Ms. M. Sabaratnam Director
Mr. K.A.S. Jayatissa Director
Mr. A.D. Jegasothy Director 27.500 4.701
Lien over exporters foreign currency for USD 142,806 and GBP 20,714
102

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Development Deshamanya
Bank Ltd Dr. Lalith Kotelawala Chairman Overdraft 75.000 51.679
Mrs. S.P.C. Kotelawala Director Guarantees 25.000 25.000
Ms. M. Sabaratnam Director
Mr. K.A.S. Jayatissa Director
Mr. R. Renganathan Director 100.000 51.679 25.000
Mr. J.E.P.A. De Silva Director
Mr. A.D. Jegasothy Director Lien over Fixed Deposits for Rs.100 Mn.
Company’s investment in Seylan Bank debentures amounted to Rs.25 Mn.
Seylan Bank Employees Trustees of the Company Interest Income 1.886
Provident Fund 1.886
Investment in Seylan Bank Ltd. debentures amounted to Rs.300 Mn.
Ceylinco Building Deshamanya
Society Ltd Dr. Lalith Kotelawala Chairman Term Loan 27.827 27.827
Mrs. S.P.C. Kotelawala Director Leasing 4.481 4.481
Ms. M. Sabaratnam Deputy
Chairperson
Mr. K.A.S. Jayatissa Director
Mr. A.D. Jegasothy Director 32.308 32.308
Mr. R. Renganathan Director
Property Mortgage for Rs.30. Mn.
Secured on absolute ownership of leased assets.
The Finance Property Deshamanya
Fund Co Ltd Dr. Lalith Kotelawala Chairman Leasing 1.253 1.253
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director
Mr. K.A.S. Jayatissa Director
Ms. M. Sabaratnam Director 1.253 1.253
Secured on absolute ownership of leased assets.
CNT International Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Service Agreement 3.106
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Deputy Chairman 3.106
Ceylinco Micro Deshamanya
Technologies Ltd Dr. Lalith Kotelawala Chairman Service Agreement 0.120
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M.Perera Deputy Chairman 0.120
Ceylinco Construction Deshamanya
Company Ltd Dr. Lalith Kotelawala Chairman Overdraft 2.500 0.612
Mrs. S.P.C. Kotelawala Director
2.500 0.612
Lien over Rupee Fixed Deposits for Rs.2.5 Mn.
The Sitar (Pvt) Ltd Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 1.000
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director
1.000
Lien over Rupee Fixed Deposits for Rs.1.0 Mn.
Enspire Technologies Deshamanya
(Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.180
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director
0.180
SEYLAN BANK - Annual Report 2006
103

Notes to the Accounts
Party/Parties Name of Director Relationship Aggregate Amount of Accommodation Service Obtained/Other Transactions
Accommodated Outstanding as at 31.12.2006
Nature of Interest in Nature of Service Amount Amount
Accommodation Suspense Bad & Doubtful Payable/Receivable Paid/Received
Limit Funded Non Provision Debt Provision
Funded for the year for the year
Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn. Rs.Mn./(USD) Rs.Mn. Rs.Mn.
Ceylinco Exhibition and Deshamanya
Conventions (Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.033
Mrs. S.P.C. Kotelawala Director
0.033
Ceylinco Vila Housing Deshamanya
Development Ltd Dr. Lalith Kotelawala Chairman Letter of Credit 3.465
Mrs. S.P.C. Kotelawala Director
3.465
Cash Margin Rs.1.786 Mn.
Ceylinco Grameen Shop Deshamanya
House (Pvt) Ltd Dr. Lalith Kotelawala Chairman Overdraft 0.004
Mrs. S.P.C. Kotelawala Director
Mr. K.A.S. Jayatissa Director
0.004
Seylan Credit Card Deshamanya
Co Ltd Dr. Lalith Kotelawala Chairman Leasing 5.403 5.403 Management Fees 3.595
Mrs. S.P.C. Kotelawala Director
Mr. S.K.M. Perera Director
Mr. A.M. Pasqual Director 5.403 5.403
3.595
Ceylinco Leasing Deshamanya
Corporation Ltd Dr. Lalith Kotelawala Chairman Commission paid 0.754
Mrs. S.P.C. Kotelawala Director 0.754
Mr. K.A.S. Jayatissa Director Service Charges Recovered 0.006
0.006
Ceylinco Sembcorp Deshamanya
Integrated Logistics Dr. Lalith Kotelawala Chairman Transport Charges 0.204
(Pvt) Ltd. Mrs. S.P.C. Kotelawala Director 0.204
Ceylinco Seraka Limited
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.001
Mrs. S.P.C. Kotelawala Director
Mr. R. Renganathan Director 0.001
The Magnum Fund Ltd
Deshamanya
Dr. Lalith Kotelawala Chairman Overdraft 0.001
Mrs. S.P.C. Kotelawala Director
Mr. A.D. Jegasothy Director
Mr. R. Renganathan Director 0.001
SEYLAN BANK - Annual Report 2006
Ceywin Telemedical Deshamanya
Services (Pvt) Ltd Dr. Lalith Kotelawala Chairman Group Expenses 5.000
Mrs. S.P.C. Kotelawala Director
5.000
The pricing applicable to such transactions are based on the assessment of risk and the pricing model of the Bank and is comparable with what is applied to transactions between the Bank and its unrelated
customers unless otherwise stated.
Deposits by the Companies within the Ceylinco Group was Rs.2,903.995 Mn., as at 31 st December 2006.
104

Notes to the Accounts
42. Maturity Analysis
Bank
42(a) An analysis of the total assets employed as at 31 st December 2006 based on the remaining period at the Balance
Sheet date to the respective contractual maturity dates is given below:
Up to 3 3 to 12 1 to 3 3 to 5 More Than Total as at
Months Months Years Years 5 Years 31.12.2006
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.’000
Interest Earning Assets
Bills of Exchange 1,540,970 210,525 76,329 - - 1,827,824
Loans & Advances 26,532,475 27,936,763 13,976,328 4,739,447 10,920,749 84,105,762
Lease Receivable 787,724 1,994,757 2,433,642 2,295,673 18,641 7,530,437
Balances with Banks 204,937 - - - - 204,937
Short Term Funds 1,448,038 - - - - 1,448,038
Investments in Debentures - 10,000 210,000 - 18,724 238,724
Treasury Bills/Bonds 1,367,375 3,167,360 10,729,560 786,910 82,480 16,133,685
Securities purchased under
Resale Agreement 1,384,402 - - - - 1,384,402
33,265,921 33,319,405 27,425,859 7,822,030 11,040,594 112,873,809
Non Interest Earning Assets
Cash in Hand 2,767,592 - - - - 2,767,592
Balances with CBSL 6,913,224 - - - - 6,913,224
Investments 143 - - - 968,326 968,469
Investment Property 175,326 175,326
Property, Plant & Equipment - - - - 3,135,030 3,135,030
Other Assets 3,472,658 - - - - 3,472,658
13,328,943 - - - 4,103,356 17,432,299
Total Assets 46,594,864 33,319,405 27,425,859 7,822,030 15,143,950 130,306,108
42(b) An analysis of the total Liabilities as at 31st December 2006 based on the remaining period at the Balance Sheet date
to the respective contractual maturity dates is given below:
Interest Bearing Liabilities
Deposits 32,215,584 34,183,160 8,175,440 7,129,350 7,612,080 89,315,614
Borrowings 7,271,526 307,950 - - 1,215,050 8,794,526
Debentures - 706,970 1,957,100 2,118,565 - 4,782,635
39,487,110 35,198,080 10,132,540 9,247,915 8,827,130 102,892,775
Non Interest Bearing Liabilities
Deposits 10,364,486 467,590 - - - 10,832,076
Other liabilities 9,039,959 - - - - 9,039,959
Deferred Taxation 355,686 - - - - 355,686
Tax Payable 817,297 - - - - 817,297
Dividend Payable 14,442 - - - - 14,442
Shareholders Funds - - - - 6,353,873 6,353,873
20,591,870 467,590 - - 6,353,873 27,413,333
Total Liabilities 60,078,980 35,665,670 10,132,540 9,247,915 15,181,003 130,306,108
SEYLAN BANK - Annual Report 2006
105

Notes to the Accounts
42. Maturity Analysis
Group
42(c) An analysis of the total assets employed as at 31 st December 2006 based on the remaining period at the Balance
Sheet date to the respective contractual maturity dates is given below.
Up to 3 3 to 12 1 to 3 3 to 5 More Than Total as at
Months Months Years Years 5 Years 31.12.2006
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Interest Earning Assets
Bills of Exchange 1,540,970 210,525 76,329 - - 1,827,824
Loans & Advances 26,554,677 28,243,746 14,380,489 4,839,521 11,019,982 85,038,415
Lease Receivable 1,020,046 2,804,329 3,912,441 2,768,565 18,641 10,524,022
Balances with Banks 204,937 - - - - 204,937
Short Term Funds 1,473,016 - - - - 1,473,016
Investments in Debentures - 10,000 101,500 - - 111,500
Treasury Bills/Bonds 1,504,776 4,315,446 12,824,807 859,893 109,928 19,614,850
Securities purchased under
Resale Agreement 1,337,283 - - - - 1,337,283
33,635,705 35,584,046 31,295,566 8,467,979 11,148,551 120,131,847
Non Interest Earning Assets
Cash in Hand 2,819,826 - - - - 2,819,826
Balances with CBSL 6,913,338 - - - - 6,913,338
Investments 287 - - - 212,128 212,415
Investment Property 1,425,470 - - - - 1,425,470
Property, Plant & Equipment - - - - 4,644,555 4,644,555
Other Assets 4,311,432 - - - - 4,311,432
15,470,353 - - - 4,856,683 20,327,036
Total Assets 49,106,058 35,584,046 31,295,566 8,467,979 16,005,234 140,458,883
42(d) An analysis of the total Liabilities as at 31st December 2006 based on the remaining period at the Balance Sheet date
to the respective contractual maturity dates is given below.
Interest Bearing Liabilities
Deposits 32,164,672 34,183,160 8,175,440 7,129,350 7,612,080 89,264,702
Borrowings 10,262,763 2,739,726 368,543 502,608 1,220,570 15,094,210
Debentures - 899,748 2,149,114 2,197,907 84,254 5,331,023
42,427,435 37,822,634 10,693,097 9,829,865 8,916,904 109,689,935
SEYLAN BANK - Annual Report 2006
Non Interest Bearing Liabilities
Deposits 10,346,517 467,590 - - - 10,814,107
Other liabilities 9,583,968 - - - - 9,583,968
Deferred Taxation 356,170 - - - - 356,170
Tax Payable 911,700 - - - - 911,700
Dividend Payable 14,442 - - - - 14,442
Shareholders Funds - - - 7,468,113 7,468,113
Minority Interest - - - 1,620,448 1,620,448
21,212,797 467,590 - - 9,088,561 30,768,948
Total Liabilities 63,640,232 38,290,224 10,693,097 9,829,865 18,005,465 140,458,883
106

Notes to the Accounts
43. Segment Reporting - Group
Banking Leasing Treasury Property/Investments Eliminations/Unallocated Consolidated
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Revenue
Interest 11,626,548 9,175,858 - - 2,127,174 1,308,183 964 33,170 60,359 (9,278) 13,815,045 10,507,933
Exchange 178,679 171,167 - - 383,261 348,073 - - 38,959 (18,151) 600,899 501,089
Lease Income/Brokering - - 1,579,810 1,124,015 - - - - - - 1,579,810 1,124,015
Commissions & Fee Income 1,126,651 995,350 7,019 60,401 213,902 252,165 - - 2,241 39,957 1,349,813 1,347,873
Other 1,161,268 684,147 46,697 13,314 (54,900) 72 256,856 176,923 (71,344) 18,187 1,338,577 892,643
Total Revenue from
External Customers 14,093,146 11,026,522 1,633,526 1,197,730 2,669,437 1,908,493 257,820 210,093 30,215 30,715 18,684,144 14,373,553
Total Revenue 14,093,146 11,026,522 1,633,526 1,197,730 2,669,437 1,908,493 257,820 210,093 30,215 30,715 18,684,144 14,373,553
Segment Result 2,784,351 2,050,606 179,261 147,309 445,955 427,209 7,210 7,700 (1,734,775) (1,418,427) 1,682,002 1,214,397
Unallocated Income/Expenses (18,054) (400)
Profit from Operations 1,663,948 1,213,997
Income Tax Expense (756,723) (393,291)
Profit After Income Tax 907,225 820,706
Minority Interest (58,481) (43,367)
Net Profit for the Year 848,744 777,339
OTHER INFORMATION
Segment Assets 113,302,966 100,032,709 4,139,374 2,974,046 14,972,101 17,334,957 3,587,690 3,281,559 4,456,752 1,466,902 140,458,883 125,090,173
Total Assets 113,302,966 100,032,709 4,139,374 2,974,046 14,972,101 17,334,957 3,587,690 3,281,559 4,456,752 1,466,902 140,458,883 125,090,173
Segment Liabilities 107,821,444 98,750,962 3,542,242 2,739,753 14,696,533 17,435,761 960,597 676,378 4,349,506 (1,683,073) 131,370,322 117,919,781
Shareholders Funds 7,468,113 5,731,874 7,468,113 5,731,874
Minority Interest 1,620,448 1,438,518 1,620,448 1,438,518
Total Liabilities 107,821,444 98,750,962 3,542,242 2,739,753 14,696,533 17,435,761 960,597 676,378 13,438,067 5,487,319 140,458,883 125,090,173
Cash Flows from
Operating Activities 5,273,752 (1,047,468) (286,681) (498,601) 478,452 536,478 228,278 (84,757) (1,716,429) 29,204 3,977,372 (1,065,144)
Cash Flows from
Investing Activities (5,250,567) (217,462) (27,501) (23,500) 2,178,921 (4,248,425) (429,296) (240,112) 2,110,479 (3,393,298) (1,417,964) (8,122,797)
Cash Flows from
Financing Activities (159,839) 222,456 460,929 351,032 145,975 320,830 214,874 325,283 (1,186,493) 5,577,863 (524,554) 6,797,464
Capital Expenditure (178,334) (207,972) 16,606 34,646 281 (26,907) (17,325) 8,244 (451,704) (472,342) (630,476) (664,331)
SEYLAN BANK - Annual Report 2006
107

Geographical Analysis
Deposits & Advances
As At 31st December 2006
Province No of Deposits % Advances %
Branches (Rs.Mn.) Including
Leasing
(Rs.Mn.)
Western 47 69,639 69.6% 74,111 81.2%
Southern 7 5,262 5.3% 2,694 2.9%
Uva 3 1,584 1.6% 701 0.8%
North Central 5 1,851 1.8% 1,366 1.5%
North Western 8 6,009 6.0% 3,115 3.4%
Eastern 5 2,607 2.6% 1,405 1.5%
Northern 2 1,930 1.9% 1,217 1.3%
Sabaragamuwa 9 5,112 5.1% 2,938 3.2%
Central 8 6,085 6.1% 3,884 4.2%
Total 94 100,079 100% 91,431 100%
Commitments & Contingencies
As at 31st December 2006
Rs.Mn.
Province No of Acceptances Stand by Guarantees Documentary Bills Forward Total
Branches Letter of Credit For Exchange
Credit Collection Contracts
Western 47 3,761 348 5,809 3,698 1,779 34 15,429
Southern 7 19 - 253 6 15 - 293
Uva 3 - - 138 4 - - 142
North Central 5 23 - 334 11 10 - 378
North Western 8 90 - 393 38 26 - 547
Eastern 5 - - 183 - 1 - 184
Northern 2 - - 150 - 4 - 154
Sabaragamuwa 9 38 - 237 40 4 - 319
Central 8 128 - 515 162 12 - 817
Commitments 4,661
Total 94 4,059 348 8,012 3,959 1,851 34 22,924
SEYLAN BANK - Annual Report 2006
108

Value Added Statement
Value added is the wealth the Bank has been able to create by providing clients with a quality value added service.
2006 2005
Rs.’000 % Rs.’000 %
Value added
Income earned by providing banking services 16,119,741 12,463,721
Cost of services (10,308,246) (7,209,023)
Value added by banking services 5,811,495 5,254,698
Non-banking income 1,063,740 626,994
Provision for bad debts (1,684,495) (2,012,065)
5,190,740 3,869,627
Value allocated
To employees
Salaries, wages and other benefits 2,557,072 49.26 2,039,750 52.71
To providers of Capital
Dividends to shareholders 337,196 6.50 144,434 3.73
To Government
Income tax 744,721 373,200
Turnover tax - -
Stamp Duty 14,487 -
GST - -
VAT 2,967 6,498
VAT on Profits 469,007 306,207
Debit Tax 7,138 1,238,320 23.86 4,763 690,668 17.85
To Expansion and growth
Retained Income 524,965 10.11 543,399 14.05
Depreciation 533,187 1,058,152 10.27 451,376 994,775 11.66
5,190,740 100.00 3,869,627 100.00
SEYLAN BANK - Annual Report 2006
109

Ambalangoda
Ampara
Anuradhapura
Attidiya
Avissawella
Badulla
Balangoda
Bandaragama
Bandarawela
Batticaloa
Beliatta*
Bogawanthalawa*
Boralesgamuwa
Borella
Ceylinco House
Chilaw
Cinnamon Gardens
Colombo Airport
Colombo South
Dehiattakandiya*
Dehiwela
Embilipitiya
First City Office
Free Trade Zone
Galle
Gampaha
Gampola
Ganemulla
Grandpass
Hambantota*
Hatton
Havelock Town
Hingurakgoda
Homagama
Horana
Ja-Ela
Jaffna
Kadawatha
Kalubowila*
Kalutara
Kandy
Kattankudy*
Katuneriya
Kegalle
Kekirawa
Kiribathgoda
Kochchikade
Koggala*
Kollupitiya
Kottawa
Kuliyapitiya
Kurunegala
Maharagama
Malabe
Manampitiya*
Maradana
Maradagahamula
Matale
Matara
Mathugama
Mawanella
Meegoda*
Millennium
Mirigama
Moratuwa
Mount Lavinia
Nawala*
Nawalapitiya*
Negombo
Nittambuwa
Nugegoda
Nuwara Eliya
Old Moor Street*
Panadura
Pelmadulla
Pettah
Polonnaruwa
Puttlam
Raddolugama
Ratnapura
Ruwanwella
Sarikkamulla
Savings & Travel*
Soysapura
Thalawakele
Tissamaharamaya*
Trincomalee
Vavuniya
Warakapola
Wattala
Welimada*
Weliweriya
Yakkala
*Branch without
ATM facility
SEYLAN BANK - Annual Report 2006
110

Branch Network
Ambalangoda
No 24 A, Galle Road, Ambalangoda
091-2258010,11, 2258710
091-2258010(F)
Ampara
Regal Cinema Complex,
No 129, D S Senanayake Street
Ampara
063-2224897, 2224899
Borella
No 1119, Maradana Road, Borella
011-2678189-193
011-2681194 (F)
Ceylinco House
No 69, Janadhipathi Mawatha,
Colombo 01
011-4714655, 2714651, 2445840-3
011-2447990(F)
Gampaha
No 1J, Bauddhaloka Mawatha, Gampaha
033-2222618, 2226511, 2227525,
2222656
033-2222934(F)
Gampola
No 44, Kandy Road, Gampola
081-2352740-2, 4485435
081-2352740(F)
Anuradhapura
No 47, Main Street, Anuradhapura
025-2224649, 2223115
025-2223116(F)
Attidiya
No 214, Main Road, Attidiya, Dehiwela
011-2738453, 2729696, 4203565
011-2722967(F)
Awissawella
No 71, Ratnapura Road, Awissawella
036-222007, 2232265
5673333 - Direct
036-2222009(F)
Badulla
No 10, Cocowatta Road, Badulla
055-2222073, 2223773, 2223414
055-2222884(F)
Balangoda
No 123, Barnes Ratwatte Mawatha,
Balangoda
045-2287107, 2287007
045-2287344(F)
Bandaragama
No 17A, Horana Road, Bandaragama
038-2290706, 2290460, 2290903,
038-2291125(F)
Bandarawela
No 240, Badulla Road, Bandarawela
057-2223144, 2231085
057-2222964(F)
Batticaloa
No 28, Bar Road, Batticaloa
065-2251478, 2224419, 2224587
065-2224353(F)
Beliatta
No 50, Walasmulla Road, Beliatta
047-2251478, 2243461, 2243441
047-2243619(F)
Bogawanthalawa
No 79, Main Street, Bogawanthalawa
052-2267576
052-2267578(F)
Boralesgamuwa
No 24, Kesbewa Road, Boralesgamuwa
011-2518867, 2517550, 2509823-4,
2517548-9
011-2509526(F)
Chilaw
No 46, Kurunegala Road, Chilaw
032-2222121, 2223455, 2223499,
4860550
032-2223279(F)
Cinnamon Gardens
No 4, Baptist Chapel Road, Colombo 07
011-2683726, 2694966, 2697552,
2695214, 5340347
011-2683725(F)
Colombo Airport
Bandaranayake International Airport,
Katunayake
011-2252861, 2252955
011-2252955(F)
Colombo South
No 30, Galle Road, Colombo 06
011-2593405-7, 2594856, 4510594,
2510524
011-2593406(F)
Dehiattakandiya
No 83/84, Main Street, Dehiattakandiya
027-2250268, 2250034-5
027-2250268(F)
Dehiwela
No 166D, Galle Road, Dehiwela
011-2727844, 2738843, 2726395,
4201756
011-2739128(F)
Embilipitiya
No 53, New Town Road, Embilipitiya
047-2230340-2, 2261187
047-2230342(F)
First City Office
No 33, Sir Baron Jayathilake Mawatha,
Colombo 01
011-2437901-7, 2329525, 4725005-9,
2439834
011-2329509(F)
Free Trade Zone
Unit No 3, Plaza Complex, KIPZ,
Katunayake
011-2252566-7
011-2252567(F)
Galle
No 34, 1st Cross Street, Talbot Town,
Galle
091-2234642 (Dataline)
091-2234542, 2232242, 2223514
091-2234542(F)
Ganemulla
No 187/1, Kirindiwitta Road, Ganemulla
033-2260230, 2260738
033-2260737(F)
Grandpass
No 401, Prince of Wales Avenue,
Colombo 14
011-2331726, 2451061, 4610175
011-2440117(F)
Hambantota
No 32 & 34, Wilmot Street, Hambantota
047-2220507, 2220518
047-2220519(F)
Hatton
No 42, Dunbar Road, Hatton
051-222234, 2222347
051-2222682(F)
Havelock Town
No 164,166, Havelock Road, Colombo 05
011-2596550-3, 2596549
011-2597498(F)
Hingurakgoda
No 13 & 14, Airport Road, Hingurakgoda
027-2246242, 2246087
027-2246043(F)
Homagama
No 94, High Level Road, Homagama
011-4442021-2, 2855065
011-2855066(F)
Horana
No 49, Panadura Road, Horana
034-2261176, 2261018
034-2263518(F)
Ja-Ela
No 74, Negombo Road, Ja-Ela
011-2237421, 5558373
011-2237416(F)
Jaffna
No 560-562, Hospital Road, Jaffna
021-2223755
021-2223047(F)
Kadawatha
No 28B, Ganemulla Road, Kadawatha
011-2925594-5, 4816821
011-2925596(F)
SEYLAN BANK - Annual Report 2006
111

Branch Network
SEYLAN BANK - Annual Report 2006
Kalubowila
No 31, Sunandarama Road, Kalubowila
011-2822871, 4202648, 4201550,
2826328
Kalutara
No 338, Main Street, Kalutara
034-2223175, 2225035, 2225037
034-2223033(F)
Kandy
No 65, Kings Street, Kandy
081-22233484, 22232767
081-22232322(F)
Kattankudy
No 230, Main Street, Kattankudy
065-2246625, 2247456
065-2246696(F)
Katuneriya
No 99/1, Colombo - Chilaw Road,
Katuneriya
031-2256939, 2257764
031-2255209(F)
Kegalle
No 143, Colombo Road, Kegalle
035-2222007, 2223537-8
035-2222006(F)
Kekirawa
No 6, Yakalla Road, Kekirawa
025-2264590-1
025-2264592(F)
Kiribathgoda
No 52, Kandy Road, Kiribathgoda
011-2912378, 2910581, 4936902
011-2912379(F)
Kochchikade
No 66, Chilaw Road, Kochchikade
031-2277580, 2277661
031-2277341(F)
Koggala
No 9, Export Processing Zone, Koggala,
Habaraduwa
091-2283389-90
091-2283389(F)
Kollupitiya
No 428, R A De Mel Mawatha,
Colombo 03
011-2576911-3, 2565172, 2564084
011-2577913(F) 2576914(F)
Kottawa
No 34, Nawsiri Building,
High Level Road, Kottawa
011-2842682–3, 4304785
011-2851292(F)
Kuliyapitiya
No 139, Main Street, Kuliyapitiya
037-4696450, 2281510, 2281450
037-2281451(F)
Kurunegala
No 54, Colombo Road, Kurunegala
037-2223581-2, 2224276-8
037-2224277(F)
Maharagama
No 201, High Level Road, Maharagama
011-2850648, 2850629, 2841997-8
011-2850649 (F)
Malabe
No 821 A, Kaduwela Road, Malabe
011-4404323, 2560403, 2561415
011-2561414(F)
Manampitiya
Main Street, Manampitiya
027-2224455
027-2223168(F)
Maradana
No 250, Sri Sangaraja Mawatha,
Colombo 10
011-2334184-5, 2473773
011-2473280(F)
Maradagahamula
No 150, Divulapitiya Road,
Maradagahamula
031-2246377, 2246096
031-2246378(F)
Matale
No 166-168, Trincomalee Street, Matale
066-2223241-2, 2232934-6, 4460123
066-2223215(F), 2232935(F)
Matara
No 45, Anagarika Dharmapala Road,
Matara
041-2221181-2, 2222393
041-2223064(F)
Mathugama
No 6, Aluthgama Road, Mathugama
034-2247544-5
034-2247091(F)
Mawanella
No 21, Court Road, Mawanella
035-2246007, 2246988
035-2246989(F)
Meegoda
Meegoda Economic Centre
Meegoda
011-2830820
Millennium
No 90, Galle Road, Colombo 03
011-2456135, 2456103, 2456110
011-2456144, 2456109, 2452502
011-2452506(F)
Mirigama
No 42, Danowita Road, Mirigama
033-2273000-3
033-2273000(F)
Moratuwa
No 509, Galle Road, Rawathawatta,
Moratuwa
011-2647900-2, 2642953-4, 2645430,
4211244
011-2647901(F)
Mount Lavinia
No 198, Galle Road, Ratmalana
011-2731266-7, 2723272, 4213189,
2213194
011-2723271(F)
Nawala
No 10/5, Narahenpita Road, Nawala
011-2874208, 2875329, 2805207,
2807329, 2806727, 4404290-916
011-2805779(F)
Nawalapitiya
No 77, 77/1, Dolosbage Road,
Nawalapitiya
054-2222018, 2222056-7
054-2222018(F)
Negombo
No 141, Rajapakse Broadway, Negombo
031-2224336-7, 2224302, 2224334
031-2224335(F)
Nittambuwa
No 195/1, Colombo Road, Nittambuwa
033-2296650
Nugegoda
No 211, High Level Road, Nugegoda
011-2811180-1, 2829054
011-2811182(F)
Nuwara Eliya
No 48, Park Road, Nuwara Eliya
052-2223026, 2223593, 2234338
052-2223002(F)
Old Moor Street
No 315–317, Old Moor Street,
Colombo 12
011-2421483, 5358885, 5354658
011-2331774(F)
Panadura
No 401, Galle Road, Panadura
038-2233172-4, 2238355
038-2235304(F)
Pelmadulla
No 17, Galwatta Road, Pelmadulla
045-2275037
Pettah
No 96, Main Street, Colombo 11
011-2337823-6, 2441471, 4715982,
2718341, 4716455
011-2337826(F)
Polonnaruwa
Lake View Building, Lake View Junction,
Polonnaruwa
027-2223168, 2224590
027-2223169(F)
112

Branch Network
Puttlam
No 56, Kangani Kulam Street, Puttlam
032-2265580, 2265194
032-2265469(F)
Raddolugama
No 171, National Housing Scheme,
Raddolugama
011-2292778, 2292251-2
011-2292372(F)
Weliveriya
No 477/20/15, Edwin Estate,
Main Street, Weliveriya
033-2255291, 2255021
033-2255355(F)
Yakkala
No 104, Kandy Road, Yakkala
033-2222492, 2226378, 2233526
033-2233527(F)
Minuwangoda
No. 52 A/2, New Shopping Complex,
No. 87, Bus Stand, Airport Road,
Minuwangoda.
011-2299004-5
Nugegoda
(Customer Service Centre)
No. 280, High Level Road, Colombo 06
011-2829054
Ratnapura
No 6, Goodshed Road, Ratnapura
045-2223111, 2223730, 2231730
045-2222111(F)
Ruwanwella
No 52, Main Street, Ruwanwella
036-2267445-6
036-2267447(F)
Sarikkamulla
No 97, Galle Road, Sarikkamulla,
Panadura
038-2235264-5
038-2233082(F)
Savings & Travel
No 202-204, Main Street, Colombo 11
011-4718344-5, 2345796-7
011-2323303, 2345797(F)
Soysapura
No 164/2, Soysapura, Moratuwa
011-2622756, 5524673
011-2612003(F)
Thalawakele
No 8, Kotmale Road, Thalawakele
052-22258635
052-22258638-9(F)
Tissamaharamaya
No 547, Debarawewa, Tissamaharama
047-2237161-2, 047-2237458-9
047-2237163(F)
Trincomalee
No 289, 289/1, Central Road,
Trincomalee
026-2227701
026-2227702 (F)
Vavuniya
No 45, 2nd Cross Street, Vavuniya
024-2222633-4, 2220077
024-2222933(F)
Warakapola
No 192, Main Street, Warakapola
035-2267628-9
035-2267123(F)
Wattala
No 276, Negombo Road, Wattala
011-2933589-90
011-2931603(F)
Welimada
No 51, Nuwara Eliya Road, Welimada
057-2245350, 2245617
057-2245395(F)
CONVENIENT BANKING CENTRES
Baduraliya
No 92, Ratnapura Road, Baduraliya
034-2246733
Beruwala
No 82, Galle Road, Beruwala
034-2279887
034-2279888(F)
Dambulla
No 601, Anuradhapura Road, Dambulla
066-2283022-3
Hasalaka
No 95, 96,
Co-operative Society Building,
Kandy Road, Hasalaka
055-2258324
055-2258325(F)
Ingiriya
No 23, Central Building,
Padukka Road, Ingiriya
034-2269754, 2269900
Katugastota
No 444, Katugastota Road, Kandy
081-2212870
Kirindiwela
No 17, Gampaha Road, Kirindiwela
033-2269709
Kotagala
No 190, Wootton Bazaar, Kotagala
051-2222844
051-2222797(F)
Kotahena
No 310/2, George R De Silva Mawatha,
Colombo 13
011-2399660,
011-2393033(F)
Kotikawatte
No 260/A, I.D.H. Road, Kotikawatta
011-2418863
Kotiyakumbura
No 63, Main Street, Kotiyakumbura
035-2289035,
035-2289067(F)
Mawathagama
No 56, Kurunegala Road, Mawathagama
037-2298666-7
Pallekele
BOI, Pallekele
081-2423135
Piliyandala
No 85/1, Horana Road, Piliyandala
011-2604982
Ranpokunagama
No 1, Maduwegedara, Nittambuwa
033-2282241-2
Samanthurai
No 113, Hijra Junction, 1st Street,
Samanthurai
067-2261284
067-2261285 (F)
Veyangoda
No 177, Main Street, Veyangoda
033-2295050-1
Wijerama
No 525, High Level Road,
Wijerama Junction,
Gangodawila, Nugegoda
011-4301878
Yatiyantota
No 51/1/2, Ginigathhena Road,
Yatiyantota
036-2267480-1
DEPOSIT CENTRES
Kadadora
Kadadora Village Centre, Kadadora
081-2352742
081-2352740(F)
Maswela
Maswela Village Centre, Maswela
081-2352742
081-2352740(F)
SEYLAN BANK - Annual Report 2006
113

Country Profile & Economic Indicators
SEYLAN BANK - Annual Report 2006
Country
: The Democratic Socialist
Republic of Sri Lanka
Capital
: Sri Jayawardenapura, Kotte
Commercial Capital : Colombo
Population
: 19.9Mn
Land Area
: 62,705 Sq. m
(Excluding Inland Water)
Per capita Income : US$ 1,355
Income Distribution : 0.46 (Gini Coefficient):
Human Development Index : 0.755
Literacy Ratio : 92.5%
Life expectancy
: 71.7 male, 77.0 female
Dependency Ratio : 49.35%
Poverty Headcount ratio : 19.2
Population Density : 317
Availability of Electricity : 78.1 (Per 100 Households)
No of Radio
: 78.3 (Per 100 Households)
Telephone Density per 100 : 36.8
(Including Cellular Phone)
Internet & E-mail Subscribers : 125,800
Economic Indicators 2006 2005 2004
GDP (Rs.Bn) 2,802 2,366 2,029
Per Capita GDP US$ 1,355 1,197 1,031
GDP Growth Rate % 7.4 5.5 5.3
Inflation CCPI (Annual avg. Change %) 13.7 11.6 7.6
SLCPI (Annual avg. Change %) 9.5 10.6 7.9
National Saving (% of GDP) 23.4 23.4 21.6
National Investment (% of GDP) 28.7 26.5 25.0
Government Debt (Total Rs.Bn) 2,538 2,183.8 1,864
Government Debt (Foreign Debt Rs.Bn) 1,082 925 996
Sectoral Composition of the Economy
(as % GDP) 2006 2005 2004
Agri. Forestry and Fishing 16.25 16.93 17.87
Industry 27.28 26.79 26.46
Services 56.47 56.28 55.67
Government Finance 2006 a 2005 2004
(as % of GDP)
Total Govt. Revenue 17.4 16.1 15.4
Total Govt. Expenditure 26.1 24.7 23.5
Overall Budget Deficit 8.7 8.7 8.2
Public Investments 6.3 6.0 4.3
Labour Force & Employment
2006 a 2005 2004
Labour Force 7,684 8,141 8,061
Participation rate % 51.0 48.3 48.6
Unemployment rate % 6.7 7.7 8.3
Employed Persons by Sectors %
Agriculture 32.2 30.7 31.9
Industry 26.6 24.5 22.8
Services and Other 41.2 40.4 45.3
External Trade 2006 2005 2004
Export (US$ Mn) 6,883 6,347 5,757
Import (US$ Mn) 10,253 8,863 8,000
Trade balance (US$ Mn) -3,370 -2,516 -2,242
US$ 107.71 102.12 104.61
Euro 141.52 121.05 142.32
GBP 211.23 176.04 201.37
Yen 0.90 0.87 1.02
Monetary Aggregate 2006 2005 2004
Money Supply M1 (Rs.billion) 261 231 188
Consolidated Broad Money (M2b) C 1,176 1,022 859
Money Supply Growth 15.0 19.1 19.6
Reserve Money (US$ Mn)
(End Nov. 2006) 3,684 3,924 3,439
Money Multiplier M2 5.02 5.16 5.02
Velocity of Money 2.55 2.53 2.61
Banking Industry 2006 f 2005 2004
Total No of Com. Banks 23 22 22
No of Com. Bank Branches 1,423 1,405 1,374
No of ATMs 993 901 806
No of Credit Card Issued (‘000) 811 637 508
No of Debit/ATM Card Issued(‘000) 2,521 2,356 1,536
Banking Density 7.2 7.2 7.1
Commercial Banks 2006 f 2005 2004
Total Assets (Rs.Bn.) 1,647 1,114 1,028
Deposits (Rs.Bn.) 1,066 840 793
Loan & Advances (Rs.Bn.) 813 568 529
Interest Rate at year end 2006 2005 2004
(Commercial Bank Average
Weighted Prime Lending Rate AWPR) 15.3 12.2 10.2
Treasury Bill Yield - 91 days 12.8 10.1 7.2
- 364 days 12.9 10.37 7.6
Central Bank Overnight
Repurchase rate (Repo) 10.0 8.75 7.5
Central Bank Overnight Reverse
Repurchase rate 11.5 10.2 9.0
Sri Lanka Inter Bank Offer Rate
(SLIBOR Overnight) 14.7 10.9 9.6
Call Money Weekly Average (CMR) 14.6 10.9 9.6
Saving Deposits-Commercial Banks 3.0-10.53.0-10.2 2.5-7.5
One Year Fixed Deposits 11.5 9.2 9.0
Commercial Bank Average
Weighted Deposits (AWDR) 7.6 6.24 5.31
Commercial Bank Average
Weighted Fixed Deposits (AWFDR) 11.5 9.2 7.7
Saving Deposits - NSB 5.0 5.0 5.0
One Year Fixed Deposits - NSB 11.0 9.0 7.5
Share Market Indices 2006 2005 2004
All Share Price Index (1985=100) (ASPI) 2,722 1,922 1,306
Milanka Price Index (1998=1000) (MPI) 3,711 2,431 2,073
Average Daily Turnover (Rs.Mn) 188 217 236
Market Capitalization (Rs.Bn.) 834 548 382
• a Projections/estimate, f June 2005, N/A = Not Available
• Source: Central Bank of Sri Lanka & Other Publications
114

Country Profile & Economic Indicators
GDP Sectorwise Growth
Rate %
Sector Composition of Economy 2006
External Trade
US $ Mn
9
2006
8
7
2005
6
5
2004
4
2003
3
2
1
Agri, Foresty and Fishing (16.3%)
Industry (27.3%)
2002
-4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000
0
Services (56.5%)
Import Export Trade Balance
-1
Agriculture
Industrial
Services
2004 2005 2006
%
20
16
Saving & Lending Rate of
Commercial Banks
Rs Bn
1125
1000
875
750
Money Supply
Share Market Indicators
Market Capitalization Rs Bn
4,000
900
3,500
800
3,000
700
12
625
2,500
600
500
2,000
500
8
375
1,500
400
250
1,000
300
4
125
500
200
0
Dec-02
Mar-03
Jun-03
Sep-03
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-05
Mar-06
Jun-06
Sep-06
Dec-06
AWDR
AWFDR
AWPR
AWLR
0
2002
2003
2004
2005
2006
Narrow Money M1
Broad Money M2
Consolidated Broad Money M3
0
2002
2003
2004
2005
ASPI
MPI
Market Capitalization
2006
100
External Value of
Sri Lanka Rupees
Rate LKR/US$ Change %
110
10
105
100
8
Policy Interest Rate of the
Central Bank
%
20.00
18.25
95
90
85
6
4
16.50
14.75
80
13.00
75
70
65
60
55
50
2002
2003
2004
2005
Exchange Rate
Depreciation
2006
2
0
-2
-4
11.25
9.50
7.75
6.00
2002
2003
2004
2005
2006
Repo Rate Reverse Rapo Rate
Bank Rate
SEYLAN BANK - Annual Report 2006
115

2
1
3
6
Highlights of the Year
SEYLAN BANK - Annual Report 2006
4
5
1 “Tikiri” sponsored the famous “Kite
Festival”. Which was held at the Mount
Lavinia Beach.
The picture shows the participants getting
prepared for the competition.
2 As the most socially responsible bank in
Sri Lanka to commemorate the 10th
Anniversary of Borella Branch, the Bank
donated 100 plastic chairs, water filters
and repaired the mothers rest room of
Ward No. 13 of Lady Ridgeway Hospital.
3 Model Branch organised at Women’s Day
Fair held in Jaffna.
4 A Customer get-together at Nawalapitiya
Branch held on 16th February, 2006.
Picture shows lighting of Traditional oil
lamp by Customer of NLP Branch and
Mr. Ajita Pasqual (DIR/GM/CEO) and
Mr. Tudor Abeykoon (Area Manager –
Central) is also in the Picture.
5 Bandaragama Branch moved to a new
premise on February 13, 2006 giving more
space and convenience to the people of
the area enabling the Bank to provide a
better service.
6 Homagama Branch moved to a new
premise on the May 29, 2006. The picture
shows Mr. Ajitha Pasqual, Director/General
Manager/Chief Executive Officer accepting
a deposit from a customer on the day of
the opening.
7 Welimada Branch moved to new premises
on the 18th December 2006.
The picture shows Mr. Ajita Pasqual,
Director/General Manager/Chief Executive
cutting the ribbon to mark the occasion.
Mr Pandu Jayamanne, Deputy General
Manager – Administration & Small
Medium Enterprises Unit is also in the
picture.
8 Press conference held to announce the
issuance of Credit cards over the counter.
These cards are issued at all Seylan Bank
branches island wide.
9 The picture shows Mr R Renganathan,
Jt Deputy Chairman conducting a
discussion on the Bank’s performance at
the Performance Review and the Annual
Awards Ceremony 2005. Also at the head
table Mr Shirley de Silva, Senior Deputy
General Manager – Development Banking,
116

8
7
9
Mr Ajita Pasqual, Director/General
Manager/Chief Executive and Mrs
Leonie Seneviratne, Senior Deputy
General Manager – Region I.
10 Nawala Branch moved to a new
premises on the 15th of May 2006.
Mrs Leonie Seneviratne, Senior
Deputy General Manager – Region 1
was the Chief Guest at this
occasion. Mr Eranga Lankathilleke,
Manager – Nawala Branch,
Mr V K Seyone, Deputy General
Manager – Business Development,
Mr Kithsiri Perera, Deputy General
Manager – Operations &
Administrative Services and
Mr. Ajantha Madurapperuma,
Deputy General Manager –
Corporate & Foreign Currency
Banking are also in the picture.
10
117

History and Milestones
In 1986, our Chairman Deshamanya Dr Lalith
Kotelawala began a mission to fulfill a long felt
need for a truly Sri Lankan commercial bank.
From its inception, the Bank has focused on
customer service and now offers a variety of
convenient banking services. The total number
of service centres have now risen to over one
hundred thereby playing a lead role in the
financial sector of Sri Lanka.
The Bank has been in the forefront in
marketing several technology based products
and services. Seylan Bank’s social
responsibility and its commitment has grown
significantly. The Bank participated in several
welfare projects and programmes such as
promotion of sports, celebration of festivities
and also plays a lead role in community
service projects.
1993
• The Bank obtained the agency for USA
based ’Western Union’ money transfer
system which facilitates transfer of money
between countries within minutes.
1994
• Commencement of the bank’s first overseas
operation occurred with the takeover of
Hadi Express Exchange in Dubai and
subsequently linked up with the Saudi
American Bank in order to provide ’Speed
Cash’ service to customers, which was
another money transfer system to assist
Sri Lankans working in the Middle East.
moved into its new Headquarters Building
namely Ceylinco Seylan Towers, situated in
Kollupitiya and opening of the Millennium
Branch.
1999
• The Bank introduced a PC based system for
budgeting and performance assessment.
The first awards ceremony under this
system was also held this year.
2000
• The Y2K issue was successfully handled.
SEYLAN BANK - Annual Report 2006
1988
• The license to commence banking business
was issued by the Central Bank of Sri Lanka
on 18th March 1988. The soft opening was
conducted by Chairman Deshamanya
Dr Lalith Kotelawala on 24th March 1988
introducing Saturday Banking from the very
inception.
1992
• Sri Lankan Branch of the Bank of Credit and
Commerce International (BCCI) was taken
over, and recommenced its operations as
the Chatham Street branch of Seylan Bank.
• Seylan Bank recorded history as the first
bank to introduce an indigenous credit card
- Seylan Card.
• Two subsidiaries, namely, Seylan Merchant
Bank Ltd. and Ceylinco Seylan
Developments Ltd. were incorporated.
• Obtained membership in SWIFT (Society for
Worldwide Interbank Financial
Tele-communications), to relay documentary
credits, customer instructions and bank
transfers etc.
1994
• Linked with Visa International Network, to
issue Visa Classic and Visa Gold Credit
Cards, launched ATM card namely ’SMART’
(Seylan Multi Action Rapid Teller) and
introduced Seylaphone service.
1996
• Commenced the second overseas operation
as Sri Lanka Express Exchange in Oman.
1997
• Introduced the ’Profit Centre Concept’ in
1997 enhancing the autonomy of branches.
• Marking its 10th Anniversary, Seylan Bank
2001
• The Chatham Street Branch moved into
’Ceylinco House’ and was renamed as the
’Ceylinco House Branch’.
• This year also saw the introduction of Visa
Electron Card, Visa Affinity Cards to old boys
of St. Joseph’s, St. Peter’s and St. Benedicts.
• The Rewards Plus Scheme was replaced
with the ’Merit Rewards’ Scheme.
• The Bank’s ’Govisarupatha’ won the
prestigious Asian Banking Award under the
category for the best product coming under
the micro-credit project.
2002
• The dawn of peace in 2002, enabled the
Bank to establish branches in Jaffna and
Trincomalee, and also the establishment of
three convenient banking centres in
Piliyandala, Dambulla and Veyangoda.
118

History and Milestones
• The Bank won the best Business Expansion
Award at Western Union Middle East and
South Asia Regional Conference held in Goa.
• Western Union won an award for the
’Service Brand of the Year’ at Brand
Excellence 2002.
• The Bank’s logo underwent a change in
order to reflect the flexibility of the
institution and to denote its greater
orientation to customer expectations.
2003
• The Bank recorded the highest profits in its
entire history.
• Business Today Magazine positions the Bank
as the number 3 corporate in
Sri Lanka, and LMD Magazine ranks the bank
at number 4.
• The balanced scorecard system has
advanced with the introduction of balanced
scorecard based budgeting.
• The formation of a specialised Development
Banking Unit to serve the SME sector of the
country and facilitate poverty alleviation.
• Mrs Rohini Nanayakkara relinquishes her
duties as GM/CEO, with Mr Ajita Pasqual
named as her successor from 2004.
2004
• Mr Ajita Pasqual assumed duties as
DIR / GM / CEO of the Bank
• “Merit Reward” won the Silver Award for
“Service Brand of the Year” at SLIM
awards 2004.
• Bank won the “International – Diaspora
Initiatives Award”, awarded by Western
Union International.
• Our chairman Deshamanya Dr Lalith
Kotelawala has been nominated as the
“most socially responsible Sri Lankan” by
LMD’s readership.
• Some branches located in Southern and
North East coastal belts were affected by
the Tsunami, which occurred on the 26th
December 2004. Some employees of the
bank and a large number of customers
became victims of this biggest natural
disaster ever to hit Sri Lanka.
• Seylan Bank together with the other
Ceylinco group companies, actively involved
in the nation’s re-building programs with the
guidance and directions of the Chairman
Deshamanya Dr. Lalith Kotelawala.
2005
• Passed Rs.1 billion milestone in profitability
before corporate tax.
• LMD, together with Sting Consultants
adjudged Seylan as among the top 20
brands in the country
• Ceylinco Group (Where Seylan is one of the
largest stake holders) has rated as one of
the three “Most Respected Sri Lankan
Entities” by the LMD.
2006
• Reached Rs. 1 billion milestone in Customer
Deposit base as at December 2006
• Bank tied up with Ceylinco Fast Cash (One
of the Ceylinco group companies) and with
some of the leading money transfer
providers in the world (XPress Money
Transfer Service – UAE Exchange Company –
Kuwait, ‘Speed Cash Now’Money Transfer
Service – Saudi American Bank – KSA, AFX
Remit – Al Farden Exchange –Qatar are
some of the money transfer providers which
Seylan Bank created links with) , in order to
facilitate cost effective, secured &
convenient service to the private inward
remittance senders.
• Seylan Bank set yet another first in the
History of Banking by waiving Stamp Duty on
Credit Cards. Also the Seylan Bank Card
Centre launched the Visa Debit Gold Card,
and the Platinum Credit Card during
year 2006
• Bank became the largest issuer of VISA
cards in Sri Lanka.
• Bank was among the award winners of
“National Business Excellence Awards 2004”
organised by the National Chamber of
Commerce of Sri Lanka.
• The role of the “Business Process
Re-engineering (BPR)” exercise was
completed in August 2005
• Successfully obtained the ISO 9001:2000
certified for HR & SDC.
SEYLAN BANK - Annual Report 2006
119

Ten Year Summary
Ten Year Summary of Financial Statements
(Rs.000)
Year Ended 31st December 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
Restated Restated
Trading Results
Gross Income 17,183,481 13,090,715 10,072,376 9,973,644 8,988,278 8,475,059 6,745,575 5,823,794 4,995,267 4,829,504
Profit Before Income Tax 1,606,882 1,061,033 478,291 705,953 677,989 278,435 256,536 181,532 239,822 201,187
Taxation 744,721 373,200 69,648 114,539 10,021 5,928 10,932 9,729 10,308 1,177
Profit after Taxation 862,161 687,833 408,643 591,414 667,968 272,507 245,604 171,803 229,514 200,010
Dividends Proposed (Ordinary) Rs. 1.50 20% 16% 15% 15% 12.5% 12% 10% 10% 5%
Per Share
Balance Sheet
ASSETS
Cash & Short Term Funds 21,854,252 17,322,763 12,080,206 15,669,097 11,673,027 10,634,811 10,582,643 10,846,407 7,942,191 8,770,585
Statutory Deposit with
Central Bank of Sri Lanka 6,913,224 5,908,292 5,050,665 3,951,940 3,866,450 3,351,904 3,617,909 3,197,215 3,094,863 2,480,955
Investments 333,960 333,755 649,117 1,076,728 1,201,947 1,075,990 658,291 451,192 426,208 399,974
Bills of Exchange 1,827,824 2,154,916 2,210,842 1,745,701 1,652,786 1,502,995 2,009,411 787,115 778,873 896,940
Loans ,Advances & Leases 91,431,102 79,314,465 60,613,807 49,903,047 42,998,354 37,254,770 33,408,337 27,294,611 24,669,698 20,221,386
122,360,362 105,034,191 80,604,637 72,346,513 61,392,564 53,820,470 50,276,591 42,576,540 36,911,833 32,769,840
Investment in Subsidiary 1,048,559 1,029,656 1,095,231 1,435,231 1,444,275 1,444,275 1,441,011 1,000,644 987,862 805,292
Other Assets 3,762,157 4,648,548 3,698,682 4,285,255 2,961,309 3,090,017 1,691,530 1,677,526 1,215,283 903,038
Property ,Plant & Equipment 3,135,030 2,896,049 2,785,092 1,984,070 1,980,472 1,947,968 2,518,481 2,058,093 1,938,863 1,313,311
130,306,108 113,608,444 88,183,642 80,051,069 67,778,620 60,302,730 55,927,613 47,312,803 41,053,841 35,791,481
LIABILITIES
Deposits from Customers 100,078,809 85,833,954 68,301,154 59,362,955 52,431,165 47,859,511 41,695,054 37,079,882 32,136,678 26,963,631
Borrowings & Debentures 13,167,204 13,037,404 6,648,055 8,606,998 6,355,156 4,400,760 6,947,041 4,523,237 2,805,111 3,066,942
Other Liabilities 9,874,483 9,998,624 9,296,381 7,838,625 6,106,586 5,796,800 5,291,888 3,906,187 4,433,281 4,291,525
Taxation 817,297 105,420 (187,856) (145,304) (46,339) (55,800) (32,156) (19,885) (15,758) (17,041)
Dividends 14,442 6,763 21,716 22,396 85,006 63,426 55,588 46,516 45,906 23,754
123,952,235 108,982,165 84,079,450 75,685,670 64,931,574 58,064,697 53,957,415 45,535,937 39,405,218 34,328,811
SHAREHOLDERS' FUNDS
Share Capital 1,705,101 869,501 869,501 869,501 469,501 446,141 435,600 435,600 435,600 435,600
Reserve Fund 420,796 377,688 343,296 303,146 289,158 275,799 270,349 265,437 262,001 257,411
Reserves 4,227,976 3,379,090 2,891,395 3,192,752 2,088,387 1,516,093 1,264,249 1,075,829 951,022 769,659
6,353,873 4,626,279 4,104,192 4,365,399 2,847,046 2,238,033 1,970,198 1,776,866 1,648,623 1,462,670
TOTAL LIABILITIES &
SHAREHOLDERS FUNDS 130,306,108 113,608,444 88,183,642 80,051,069 67,778,620 60,302,730 55,927,613 47,312,803 41,053,841 35,791,481
SEYLAN BANK - Annual Report 2006
Commitments and
Contingencies 22,924,450 22,942,795 20,983,027 17,743,062 13,206,586 10,083,442 10,274,265 8,266,319 8,280,156 7,222,864
120

Nostro Accounts
STANDARD SETTLEMENT INSTRUCTIONS - DBU
COUNTRY CITY CURRENCY CODE NAME OF BANK SWIFT BIC
AUSTRALIA MELBOURNE AUSTRALIAN DOLLAR AUD NATIONAL AUSTRALIA BANK NATAAU33
AUSTRALIA SYDNEY AUSTRALIAN DOLLAR AUD COMMONWEALTH BANK OF AUSTRALIA CTBAAU2S
CANADA TORONTO CANADIAN DOLLAR CAD ROYAL BANK OF CANADA ROYCCAT2
CYPRUS NICOSIA US DOLLAR USD CYPRUS POPULAR BANK LIKICY2N001
DENMARK COPENHAGEN DANISH KRONE DKK DEN DANSKE BANK A/S DABADKKK
ENGLAND LONDON STERLING POUND GBP BARCLAYS BANK BARCGB22
ENGLAND LONDON STERLING POUND GBP BANK OF CEYLON BCEYGB2L
ENGLAND LONDON EURO EUR NATIONAL WESTMINSTER BANK NWBKGB2L
GERMANY FRANKFURT EURO EUR DEUTSCHE BANK AG DEUTDEFF
GERMANY MUENCHEN EURO EUR BAYERISHE HYPO-UND VEREINS BANK AG HYVEDEMM
HONGKONG HONGKONG HONG KONG DOLLAR HKD STANDARD CHARTERED BANK SCBLHKHH
INDIA CHENNAI ACU DOLLAR ACU $ BANK OF CEYLON BCEYIN5M
INDIA MUMBAI ACU DOLLAR ACU $ STANDARD CHARTERED BANK SCBLINBB
INDIA MUMBAI ACU DOLLAR ACU $ HSBC BANK MUMBAI HSBCINBB
ITALY MILANO EURO EUR UNICREDITO ITALIANO UNCRITMM
JAPAN TOKYO JAPANESE YEN JPY WACHOVIA BANK PNBPJPJX
JAPAN TOKYO JAPANESE YEN JPY ABN AMRO BANK ABNAJPJT
MALDIVES MALDIVES US DOLLAR USD BANK OF CEYLON BCEYMVMV
NEW ZEALAND WELLINGTON NEW ZEALAND DOLLAR NZD BANK OF NEW ZEALAND BKNZNZ22
NORWAY OSLO NORWEGIAN KRONER NOK DNB NOR BANK DNBANOKK
OMAN OMAN OMANI RIYAL OMR OMAN INTERNATIONAL BANK OIBAOMMX
PAKISTAN KARACHI ACU DOLLAR ACU $ STANDARD CHARTERED BANK SCBLPKKX
SAUDI ARABIA RIYADH SAUDI RIYAL SAR SAUDI BRITISH BANK SABBSARI
SINGAPORE SINGAPORE SINGAPORE DOLLAR SGD STANDARD CHARTERED BANK SCBLSGSG
SINGAPORE SINGAPORE SINGAPORE DOLLAR SGD UNITED OVERSEAS BANK UOVBSGSG
SWEDEN STOCKHOLM SWEDISH KRONA SEK ABN AMRO BANK ABNASESS
SWITZERLAND ZURICH SWISS FRANC CHF ABN AMRO BANK ABNACHZ8ZRH
UAE DUBAI UAE DIRHAM AED EMIRATES BANK INTERNATIONAL EBILAEAD
USA NEW YORK US DOLLAR USD AMERICAN EXPRESS BANK AEIBUS33
USA NEW YORK US DOLLAR USD DEUTSCHE BK. TRUST COMPANY - NY BKTRUS33
USA PHILADELPHIA US DOLLAR USD WACHOVIA BANK PNBPUS3N
USA NEW YORK US DOLLAR USD HSBC BANK USA MRMDUS33
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SEYLAN BANK - Annual Report 2006
121

Glossary
Capital Adequacy Ratio
Equity Growth Rate
Net Profit Rate
Core Capital : The amount of Core
The percentage increase in total equity
Profit after tax as a percentage of
Capital that should be maintained as a
over the year under review
turnover
percentage of Risk Weighted Assets
Equity
Non Performing Loans
Total Capital : The amount of Core &
Total of Shareholders’ funds; share
Loans which are not activated for 3
Supplementary Capital as a
capital + statutory reserves + other
months or more
percentage of Risk Weighted Assets
reserves
Price Earning Ratio
Core Capital (Tier I)
GDP (Gross Domestic Product)
Market price of the bank’s share as
The sum of Paid-Up Ordinary Shares,
The value of all goods and services
number of times of the earnings per
Non-Cumulative and Non-redeemable
produced domestically by an economy
share
Preference Shares, Share Premium,
Statutory Reserve Fund, Published
Profits and Minority Interest less
Goodwill
Supplementary Capital (Tier II)
The sum of Revaluation Reserve,
General Provisions, Hybrid Capital
Instruments and Approved
subordinated Term Debts
during a specified period, usually an
year. GDP, adjusted for inflation, gives
GDP in real terms
Interest Earning Assets
Assets, which earn interest – the total
of Advances, Bills, Leases, Government
Bills & Bonds, Call Money and
Placements with other institutions
Interest In Suspense
Profit Handout
Dividends as a percentage of Profit
After Tax
Provisions for Bad & Doubtful
Debts
Specific provisions made for possible
loan losses according to the period of
non-performance and the exposure
over the collateral
Core Retail Deposits
Total of Demand and Savings Deposits
Dividend Cover
The Net Profit after tax of the bank as
number of times of the gross dividend
Effectiveness
Doing the Right Thing. Refers to the
quality of output. Mostly measured in
Net Interest Income per unit of Assets
Interest Income of Non Performing
Loans; these are accrued but not
considered as profits
Interest Rate Spread
The difference between the effective
interest yield and the effective interest
cost of the bank
Leverage
Liabilities as number of times of Equity
REPOs
Repurchase Agreements; The
securities sold to creditors (who lend
money for funding purposes), with the
intention of buying them back at a set
price
Return on Avg. Assets (ROAA)
Profit after tax as a percentage of
Average Assets
SEYLAN BANK - Annual Report 2006
Efficiency
Doing Things Right. Refers to the ratio
of output to input. Mostly measured in
Cost to Income ratio
Equity Earning Rate
Profit After Tax and Dividends as a
percentage of Equity at the beginning
of the year
Liquid Assets Ratio
Assets as a percentage of total assets
Liquid Assets
Cash, Bills, Short Term Funds, Balance
with Central Bank & Dealing Securities
Net Interest Margin
Interest Income as a percentage of
Average Interest Earning Assets
Return on Equity (ROE)
Profit after tax as a percentage of
Average Equity
Risk Weighted Assets
The assets and off balance sheet
items weighted according to the risk
involved as stipulated by the Central
Bank
122

Notice of Meeting
NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting of Seylan Bank Limited will be held on Tuesday, 26th
June 2007 at 10.30 a.m. at the ‘Oak Room’, Cinnamon Grand Colombo, No.77, Galle Road, Colombo 03 for the following purposes:
ROUTINE BUSINESS
1. To receive and consider the Report of the Directors and the Audited Financial Statements for the year ended 31st
December 2006 together with the Report of the Auditors thereon.
2. To re-elect Mrs S P C Kotelawala who retires by rotation at the Annual General Meeting in terms of Article 95 of the Articles
of Association of the Company, as a Director.
3. To re-elect Mr A M Pasqual who retires by rotation at the Annual General Meeting in terms of Article 95 of the Articles of
Association of the Company, as a Director.
4. To re-elect Mr S C O De Livera who retires by rotation at the Annual General Meeting in terms of Article 95 of the Articles of
Association of the Company, as a Director. Special notice dated 17th May 2007 has been received from Mr M S M Saleem,
Shareholder of the Company of the intention to propose the following resolution as an Ordinary Resolution :
“That Mr Solomon Christoffel Obeyesekera de Livera , who has attained the age of 70 years on 20th April 1994 and is
of 83 years be re-elected as a Director of the Company and that the age limit of 70 years referred to in Section 210 of
the Companies Act No.7 of 2007 shall not apply to Mr S C O de Livera.”
5. To re-elect Dr P R Anthonis who is over 70 years of age as a Director of the Company, special notice dated 21st May 2007
having been received from Mr S Palihawadana, Shareholder of the Company of the intention to propose the following
resolution as an Ordinary Resolution :
“That Dr Polwattearachchige Romiel Anthonis, who has attained the age of 70 years on 21st January 1981 and is of
the age of 96 years be re-elected as a Director of the Company and that the age limit of 70 years referred to in
Section 210 of the Companies Act No.7 of 2007 shall not apply to Dr P R Anthonis.”
6. To re-elect Mr J G S De Silva who retires at the Annual General Meeting in terms of Article 87 of the Articles of Association
of the Company, as a Director.
7. To declare a preference dividend as recommended by the Directors.
8. To declare a first and final (ordinary) dividend as recommended by the Directors.
9. To re-appoint Auditors for the ensuing year and authorise the Directors to determine their remuneration.
10. To authorise the Board of Directors to determine donations for 2007.
11. To transact any other business of which due notice shall be given.
BY ORDER OF THE BOARD
(Mrs) M R S Gunasekara
Company Secretary
Colombo.
22nd May 2007
Notes
(a)
(b)
(c)
A member entitled to attend/vote is entitled to appoint a proxy to attend/vote instead of him/her. A proxy holder
need not be a member of the Company. A form of proxy is enclosed for this purpose.
The completed form of Proxy should be deposited at the Office of the Company Secretary at Ceylinco Seylan Towers,
No. 90, Galle Road, Colombo 03 not less than 48 hours before the time appointed for the holding of the
Annual General Meeting.Only registered holders will be permitted to attend the Annual General Meeting.
Shareholders/proxy holders are requested when attending the Annual General Meeting to bring with them their
National Identity Cards or any other form of valid identification.
SEYLAN BANK - Annual Report 2006
123

Notes
SEYLAN BANK - Annual Report 2006
124

Form of Proxy
I/We, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
being a member/ members of Seylan Bank Limited hereby appoint:
1. Dr Jivaka Lalith Bhupendra Kotelawala of Colombo 05, whom failing
2. Mr Rajkumar Renganathan of Colombo 05, whom failing
3. Hon. Sicille Priya Carmini Kotelawala of Colombo 05, whom failing
4. Mr Ajita Mahes Pasqual of Colombo 06, whom failing
5. Mr Alagiah Daniel Jegasothy of Ragama, whom failing
6. Mr Shantikumar Khavan Micheal Perera of Battaramulla, whom failing
7. Ms Malini Sabaratnam of Colombo 04, whom failing
8. Dr Polwattearachchige Romiel Anthonis of Colombo 07, whom failing
9. Mr Solomon Christoffel Obeysekera De Livera of Colombo 04, whom failing
10. Mr Kuruppu Arachchige Sunil Jayatissa of Demanhandiya, whom failing
11. Mr Parana Thantirige Sirisena of Maharagama, whom failing
12. Mr Justin Godwin Shirley De Silva of Moratuwa, whom failing,
Mr/Mrs/Miss ……………………………………………...........……................ (holder of N.I.C. No. ........................................................) of
…………………………………………………………….............................................................................................................................
as my / our proxy to represent me/us and vote* for me/us on my/our behalf at the Annual General Meeting of the Company to
be held on 26th June 2007, at Cinnamon Grand, Colombo and at any adjournment thereof.
Signed this ………………………….……….............……….. day of ……….......…….......…………………… Two Thousand and Seven.
………………………………
Signature/s
…………………….........……………
Shareholder’s N.I.C./P.P./Co. Reg. No.
Please provide the following details:
Type of Shareholder Please tick (✓) Folio No. No. of Shares
Ordinary Voting
Ordinary (Non-voting)
Preference
* Note: Only proxy holders of Ordinary voting shareholders are entitled to vote on their behalf at the Annual General Meeting and at any
adjournment thereof. Ordinary (non-voting) shareholders and Preference shareholders can only appoint a proxy holder to represent them
at the Annual General Meeting and at any adjournment thereof.
Instructions as to the completion of the Form of Proxy are noted on the reverse hereof:
SEYLAN BANK - Annual Report 2006

INSTRUCTIONS FOR THE COMPLETION OF FORM OF PROXY
1. In terms of Article 81 of the Articles of Association of the Company –
This instrument appointing a proxy shall be in writing and
a) in the case of an individual be under the hand of the appointor or his attorney or
b) if such appointor is a company or corporation either under its common seal or
under the hand of an officer or attorney authorized in that behalf in accordance
with its Articles of Association or constitution.
In terms of Article 80, a company or corporation being a member of the Company may
appoint any of its officers or any other person to be its representative or proxy at any
meeting or meetings of the company and any person so appointed shall be entitled to be
present and vote and exercise all other powers in regard to any such meeting on behalf of
the company or corporation which he represents as if he were a member holding the shares
of such company or corporation.
2. The full name and address of the shareholder should be filled in legibly on the form of proxy
together with the National Identity Card Number/Passport/Company Registration Number
(as applicable).
3. The completed Form of Proxy should be deposited at the Office of the Company Secretary at
Level 13, Ceylinco Seylan Towers, No. 90, Galle Road, Colombo 03 not later than 48 hours
before the time appointed for the holding of the Meeting.
4. If the Form of Proxy has been signed by an attorney, the relative power of attorney should
also accompany the completed Form of Proxy for registration, if such power of attorney has
not already been registered with the company.
5. If there is any doubt as to how the vote is to be exercised, by reason of the manner in which
the Form of Proxy has been completed, no vote will be recorded by the Form of Proxy.

Chairman/Managing Director
Deshamanya Dr Lalith Kotelawala
A.M.Ex.A. (Lond), F.B.I.M., M.I.C.M. (Lond & Sri Lanka),
FIMgt (UK), HFIB (Sri Lanka), FABE (UK), PhD (Sri J).
Joint Deputy Chairman
R Renganathan
FCA, FSCMA
Joint Deputy Chairperson
Hon. Sicille P C Kotelawala
Director/General Manager/Chief Executive Officer
A M Pasqual
B.Sc. (Busi. Admin.), USA
Directors
A D Jegasothy
Attorney-at-Law & Notary Public,
F.I.C.M, F.C.I.C., M.I.C.M. (Lond)
S K M Perera
Ms M Sabaratnam
Attorney-at-Law & Notary Public
Deshamanya Dr P R Anthonis
D.Sc, F.R.C.S. (Eng), F.I.C.S., F.S.C.S.
S C O De Livera
J.P.U.M., Attorney-at-Law, Solicitor & Notary Public
K A S Jayatissa
ACIS, FSCMA, Dip. in Acct,
B.Sc. (Mgt.) Sp. Hons, FCA
P T Sirisena
B. Com (Hons), M.A. Economics
J G S De Silva (appointed w.e.f. 11th May 2007)
Secretary
Mrs M R S Gunasekara
ACIS, L.L.B. (Hons) Colombo
Attorney-at-Law
Registered Office
Ceylinco-Seylan Towers
90 Galle Road, Colombo 03
Head Office
Ceylinco-Seylan Towers
P O Box 400, 90, Galle Road
Colombo 03
Designed by Triad Advertising (Pvt) Ltd
Produced by eMAGEWISE ® (Pvt) Ltd
Photography by Taprobane Street
Colour separations by Imageline (Pvt) Ltd
Printed by Ceylinco Printing & Stationery (Pvt) Ltd
Tel : (94)-(11)-2456789, (94)-(11)-4-701000
Fax : (94)-(11)-2456456
Cable : SEYTRUST
Telex : (08)-(03)-22898, 23005 SEYLAN CE
Swift : SEYBLKLX
E-mail : info@seylan.lk
Website : www.eseylan.com
Auditors
M/S KPMG Ford, Rhodes, Thornton & Co.
Chartered Accountants
Lawyers
M/S De Livera Associates
Attorneys-at-Law,
Solicitors & Notaries Public
(Ms.) M Sabaratnam
Attorney-at-Law & Notary Public
Subsidiary Companies
Seylan Merchant Bank Ltd.
Ceylinco Seylan Developments Ltd.
Seylan Bank Asset Management Ltd.
SMB Money Brokers (Pvt) Ltd.
SMB Real Estate Ltd.
Seylan Merchant Leasing Ltd.
SMB Securities (Pvt) Ltd.
Exchange Houses Managed by Seylan Bank Ltd
Asia Express Exchange, Muscat, Oman

www.eseylan.com