ZCrDs7BWNaXNnR6RetZcgvpZnYAy__Seylan-Bank-PLC-Annual-Report-2019

Seylan Bank PLC Annual Report 2019 49 Our Value Creation Story Satisfied Customers We are a fast evolving bank and have Growth in number of visitors Average time spent developed strategies to grow our digital to the corporate web on corporate web channels sphere to enable us to provide Nos. ’000 Mins. unparalleled customer experience and convenience. This has resulted in providing 1,750 2.3 the latest digital banking facilities to our valued customers through the use of new 1,400 2.2 digital platforms. 1,050 2.1 We have continuously focused on improving our front and back-end services 700 2.0 to offer enhanced digital banking services that are functional and also provide a 350 1.9 variety of options. 0 1.8 We have extended our online chat 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 service to 24x7x365 thereby offering the 926 opportunity to customers and potential 1,050 customers who visit our website to chat 1,342 with our call centre agents to get more 1,654 information about our many products 1,564 and services. Our live chat Streamlined the We have made a significant investment service extended Digital Banking Unit to design and implement state-of-the-art to 24x7x365 security systems to ensure that our digital which offers staff platforms are exceptionally safe and rich and enhanced reliable. We were the first Bank in Sri Lanka to implement Software Defined digital banking Wide Area Network (SD-WAN) across services the entire branch network and Hyper Converged Servers at enterprise scale Introduced the Digital Developments Deployed QR (VMWARE/VSAN), among many other Banking Steering in 2019 based payments pioneering installations. Committee to drive technological change SMS alert upgraded Mobile banking is the future and in the Bank to ensure better significant focus has been directed towards providing banking on your 360 degree Digital uptake by customers palm. We have integrated the provisions Drive programme to of our services with digital banking to all the departments offer efficient banking facilities to our customers. While we continue to have Re-introduced 215 40 26 Set up Deposit SMS banking for our customers who do Palmtop Banking War Room which not use smartphones, we strongly believe ATMs CDMs Kiosks that the future of banking is tied to the consists of use of smartphones. We are therefore state-of-the-art optimising our mobile platforms towards video conferencing this. However, for customers who are more comfortable in working on larger screens, facility such as those available on computers, we offer a state-of-the-art Internet Banking Future outlook facility, where ease of use, security, and offerings are continually being enhanced. zz Launch online digital on boarding to mobile/internet banking channels Therefore, we have leveraged our digital zz Maximise the OPEX model for ATM network banking products and services to zz Continue to improve infrastructure and customer touch points to offer transform the digital banking ecosystem to a whole new paradigm. a frictionless, convenient, and secure banking experience Our presence on social media 2019 634,870 2019 12,586 2019 4,044 2019 15,012 2018 622,201 2018 7,857 2018 3,901 2018 12,700 2017 611,072 2017 3,267 2017 3,643 2017 13,087 2016 518,345 2016 2,064 2016 3,344 2016 7,923

50 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Motivated Employees Employees are a Company’s greatest asset; they are your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus, and make them feel that they are an integral part of the Company’s mission. - Anne M. Mulcahy Key Highlights 398 Nos. LKR 1.93 Mn. 3,360 Nos. Promotions Average personal benefits (M-243 and F-155) per employee (p.a) Total staff strength 43% 91,962 hrs 168 Nos. Female representation Total training hours Sales force 24.43% 324 Nos. Staff between the age of 21-30 years New recruits Social Policy We are committed to encouraging our employees to enhance their skills, map out their careers, and grow both personally and professionally. The key to our success and competitive advantage lies in our pursuit of excellence through continuous improvement of our team members. Our values embody the treatment of our The key strategies adopted during the year were: employees with respect, the provision of a work environment that promotes zz Strengthened the performance zz Implemented structured development good health and safety, and encouraging based rewards mechanisms driving initiatives, enhancing the potential to content and motivated individuals. individual performance and recognising ensuring competent and talented staff We believe that great client experience is contributions made by strategic are given priority for job positions in driven by great colleague experience. We business units. Branch Banking. want our staff to pursue their ambitions, deliver with purpose, and have a rewarding zz Designed engagement on Competency zz Provided continuous patronage and career enabled by great leaders. Development of staff through online facilitated business transformation competency profiling ensuring through centralisation, creation of identification of key competency gaps new business units, restructuring and bridging such gaps. business, and support functions.

Seylan Bank PLC Annual Report 2019 51 Our Value Creation Story Motivated Employees Staff strength 2019 Employees analysed by type of employment Full Time Other staff excluding sales force 2019 2018 2017 2016 2015 Sales force 3,165 3,085 Part Time 3,192 3,200 3,091 Total Sales force 168 144 108 – – Permanent Other contracts – – – 3,165 3,085 Contract 2,790 2,843 3,360 3,344 3,199 Trainees 2,948 2,989 2,931 65 22 Total 310 220 168 144 108 3,165 3,085 25 35 28 219 176 132 3,360 3,344 3,199 Employment contract by region Number of staff Province Permanent Contract Trainee Total Central 157 08 165 Eastern 90 0 10 100 Northern 78 06 North Central 66 0 14 84 North Western 09 80 Sabaragamuwa 121 0 11 130 Southern 107 0 11 118 Uva 125 05 136 Western* 193 145 49 Total 44 193 219 2,498 2,160 3,360 * Including head office staff 2,948 Employee analysis by grade, age, and gender Age Corporate Management Middle Management Operational Management Others –– 20 or below – –– – 30 21 451 21-30 – –1 – 19 8 342 233 31-40 1 – 21 9 324 147 275 86 10 41-50 12 2 90 43 394 366 243 Above 50 6 2 54 16 33 63 58 Male Female Nil Employees analysed by type of employment and gender Male: 1,903 Total employees: 3,360 Female: 1,457 Non-Corporate Corporate Total Non-Corporate Corporate Total Management and other Management Management and other Management 1,884 19 1,453 4 Permanent 1,665 18 1,683 1,261 4 1,265 Permanent Contract 143 1 144 49 0 49 Contract Trainees 76 0 76 143 0 143 Trainees

52 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Motivated Employees Recruitments age wise Age Total 2019 Total 2018 99 48 20 or below 121 74 47 51 62 240 125 115 21-30 176 114 31 20 5 99 11 31-40 18 13 2 22 – – – 41-50 64 381 204 177 116 Above 50 33 Total 324 208 Recruitment province wise 2019 Northern 50% 1 1 50% North Western 72% 13 5 28% North Central 75% 6 2 25% Western 58% 112 80 42% Eastern 67% 4 2 33% Sabaragamuwa 79% 15 4 21% Central 71% 30 12 29% Uva 71% 5 2 29% Southern 73% 22 8 27% Employee turnover The following chart shows the turnover of employees by age and gender. Employees resign for a variety of reasons such as, further studies, personal reasons, migration to other countries, retirement and to take advantage of better offers from other employers. Employee turnover by age and gender Age Total 2019 Total 2018 26 19 20 or below 48 32 16 7 71 113 60 53 21-30 172 101 43 24 19 7 30 22 31-40 41 34 11 17 11 8 6 41-50 26 15 6 229 136 111 93 Above 50 24 18 Total 311 200

Seylan Bank PLC Annual Report 2019 53 Employee turnover by province Our Value Creation Story Motivated Employees Northern 3 1% North Western 14 4% North Central 12 4% Western 181 58% Eastern Sabaragamuwa 9 3% Central 22 7% Uva 40 13% Southern 8 3% 22 7% Employee benefits All permanent employees enjoy a variety of benefits in addition to their salaries which are governed by a collective agreement which is reviewed every three years. Guaranteed cash and Variable pay Reimbursement Other Subsidised Retirement prerequisites loan benefits benefits other allowances expenses zz Half month’s salary zz Performance zz Professional/ zz Holiday bungalows zz Staff loans at zz EPF as holiday incentive bonus club subscription facilities concessionary zz ETF zz Two months fixed zz Sales zz Telephone bills zz Comprehensive rates for bonus (certain grades incentives medical scheme housing, zz Gratuity are subject to one zz Financial support month’s fixed bonus) for postgraduate zz Insurance scheme vehicle, (Refer note studies zz Fuel reimbursement zz Spousal support in computer and 5.16.1) the event of death education etc. zz Travelling zz Critical illness cover zz Special incentives for cashiers and zz Honorariums for employees located in completion of difficult stations banking exams zz Holiday/weekend banking incentives Average benefits LKR ’000 Employees engage per employees with employers and brands when they’re 2,500 treated as humans worthy of respect. 2,000 1,500 1,000 500 - Meghan M. Biro 0 2015 2016 2017 2018 2019

54 2019 2018 2017 Seylan Bank PLC Annual Report 2019 LKR ’000 LKR ’000 LKR ’000 Our Value Creation Story Motivated Employees Recognition and motivation 3,727,210 3,352,891 2,956,081 Staff benefits 445,817 Research has found that an organisation 111,463 401,426 354,475 that promotes a culture that is engaging, Staff salaries open, and transparent is a key motivator Basic salary 4,284,490 100,357 88,618 to retention of employees. We continue to EPF 12% embed this into our employees and work ETF 3% 3,854,674 3,399,174 practices; the low staff turnover rate is Total testament to its positive impact. A happy 141,418 132,822 113,897 workplace results in higher productivity Other benefits 106,089 108,022 78,509 and generates higher revenue in return. Holiday pay 571,985 573,758 In order to engender team spirit and Medical 125,280 124,334 536,251 enhance social networking and interaction Bonus 123,283 at work, we encourage picnics for Insurance 70,937 66,372 employees and families to participate Welfare 888,765 674,810 66,055 outside the working environment. We Other allowance/benefits 632,175 annually organise award ceremonies to Amortisation of prepaid recognise the contribution of employees. staff cost 303,632 247,541 246,519 Employee appraisals give feedback on Total other benefits 2,208,106 employee performance and encourage Total benefits 6,492,596 1,927,659 1,796,689 training and development, and many other Training cost strategies. Recognising high performers Total benefits including 44,000 5,782,333 5,195,863 and rewarding them is an effective tool training cost used to nurture increased employee Number of staff 40,536 39,051 productivity and performance. Average benefits per employee 6,536,596 5,822,869 5,234,914 We evaluate the performance of 3,360 all branches and reward those that 1,932 3,344 3,199 achieve their Key Performance Indicators (KPIs) annually. 1,729 1,624 The criteria for the rewards, set by a subcommittee consisting of senior management, are announced to the staff in advance to ensure the evaluation process is transparent. Staff satisfaction Staff satisfaction survey % In any organisation employees can be 80 I thought of as internal customers and it is necessary to satisfy them if external 64 customers are to be retained and satisfied. 48 The workplace should be like a second home for the employees. Hence it is 32 vital for the Bank to optimise the level of employee satisfaction which in turn will 16 motivate them to continuously improve their output. 71 76 As part of the Human Resources Policy, 64 the Bank carries out a Staff Satisfaction 68 Survey on an annual basis to assess the 71 morale of the staff and effectiveness of 75 their work environment. The results of the 66 survey conducted in 2019 are as follows: 71 60 67 70 74 70 74 67 73 67 72 0 E FGH ABCD C – Job responsibilities 2018 2019 F – Guidance from senior leaders I – Overall Bank A – Culture B – Growth opportunities D – Recognition E – Salary and benefits G – Supervisor/Manager support H – Work environment 72% Employees who obtained parental leave and returned to work Staff satisfaction rate 2019 2018 2017 2016 45 54 Number of staff 67 57 Returned to work (%) 100 100 100 100

Seylan Bank PLC Annual Report 2019 55 Our Value Creation Story Motivated Employees Further, we continue to conduct various We are passionate about achieving a better gender balance at Seylan religious activities during the year to maintain staff motivation levels, encourage Employee composition by gender Nos. networking and bonding, and to promote Male: team spirit. 57% Female: 43% In addition, the Seylan Welfare Committee plays a major role in 1,250 6 arranging discounts and concessions 1,000 19 from external organisations for the use 4 of Bank’s employees. 750 19 500 Sports 250 64 166 We promote staff to be physically and 0 mentally healthy which in turn motivates 68 the staff to improve productivity. We 166 conduct many sports events throughout the year. 503 659 Sporting activities are held at the Bank 584 and staff participated in various sports 770 events in year 2019 are as follows: 874 1,053 Conducted a Cricket carnival for 801 Relationship officers and our staff 948 participated in following external sports events. 2018 2019 2018 2019 2018 2019 2018 2019 A B C D zz 43rd Annual Mercantile Hockey Tournament Female Male zz 36th Mercantile Athletic Meet A – Corporate Management B – Middle Management C – Operational Management D – Others zz 63rd Mercantile Table Tennis 17% Workforce based on % Championship the ethnic group of staff are female in the zz 64th Mercantile Open Table Tennis corporate management cadre 0.8 0.3 Championship 9.2 1.9 zz Mercantile Netball League Tournaments Diversity and inclusion Sinhalese 87.8 Muslim Burgher zz 45th National Festivals Games Harnessing the inherent diversity of Tamil thoughts, views, and experiences across Other Following staff members who have the employees of the Bank is critical to our represented Sri Lanka in International business success and fundamental to our games were sponsored by the Bank. growth in the industry. We are committed to promoting equality in the workplace and zz 08th International Carom Federation creating an inclusive and flexible culture Cup 2019 where everyone can realise their full potential and make a positive contribution zz South Asian Games 2019 (Basketball) to our Bank. This in turn helps us to provide better support to our broad client zz New Zealand Open Table Tennis base across the country. Championship 2019 Workforce based on the ethnic group zz FIBA 3X3 Basketball Asia Quest 2019 2019 Total Male 2018 Total Male Female Female zz BWF World Senior Badminton 2,950 1,675 2,934 Championship 2019 Sinhalese 1,682 1,268 310 159 1,259 311 Tamil 156 154 65 47 152 68 zz Asian Youth Netball Muslim 45 20 27 12 21 26 Championship 2019 Burgher 14 13 8 4 14 5 Other 6 2 1 zz Netball World Cup 2019 Total 3,360 1,897 3,344 1,903 1,457 1,447 zz FIBA 3X3 Asia Cup 2019 Gender equality We believe in equal opportunities for all. Gender equality is a critical factor as we keep striving towards achieving a composition of males and females that better represents the make up of the population of the country.

56 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Motivated Employees We view diversity, inclusion and respect for all staff as critical to our future success and in keeping to the values espoused by us. Workforce by province and gender Our workforce is predominantly from the Western Province – 74%. Our recruitment practices are being directed towards reducing our reliance on engagement of resources from this province and spreading its source of employees to other provinces too. Workforce by province and gender Central Number of Number 2019 % Female % Number of Number 2018 % Female % Eastern branches of staff Male branches of staff Male Northern 51 81 51 83 49 North Central 15 165 84 58 42 49 15 168 85 59 42 41 North Western 12 100 58 58 35 42 12 103 61 59 35 41 Sabaragamuwa 10 49 73 22 42 10 51 74 21 26 Southern 11 84 58 60 52 28 11 86 59 63 48 37 Uva 18 80 78 59 48 40 18 80 81 58 47 42 Western 12 130 70 63 50 41 11 129 66 63 51 37 Total 13 118 86 76 12 37 13 113 86 75 13 25 136 37 55 1,115 24 7 137 38 55 1,107 45 7 49 1,383 57 1,457 45 73 51 1,370 57 1,447 43 75 2,498 1,903 43 170 2,477 1,897 173 3,360 3,344 Remuneration based on gender 2019 2018 Total Basic salary Total Average basic Salary Basic salary Number of staff Average basic Salary (monthly) Number of staff salary (monthly) ratio (monthly) salary (monthly) ratio LKR Mn. LKR Mn. Male Female LKR Mn. M/F LKR Mn. M/F Male Female Male Female Male Female Male Female Male Female Corporate Management 8.61 1.67 19 4 0.45 0.42 1.07:1 7.81 2.28 19 6 0.41 0.38 1.08:1 Middle Management 0.22 1:1 33.97 12.86 166 64 0.20 0.20 1:1 Operational Management 36.95 14.97 166 68 0.22 0.11 1:1 64.78 50.81 659 503 0.10 0.10 1:1 Others 0.05 1.2:1 58.11 45.76 1053 874 0.06 0.05 1.2:1 82.49 63.40 770 584 0.11 54.19 43.01 948 801 0.06 Workforce based on service period 4 Years 5 to 8 9 to 12 13 to 16 17 to 20 More than Total or below years years years years 20 years Corporate Management 23 Middle Management 8 4 2 0 0 9 234 Operational Management 61 4 2 7 7 153 1,354 Others 57 11 96 366 111 713 1,749 Total 721 159 266 282 96 225 3,360 847 178 366 655 214 1,100

Seylan Bank PLC Annual Report 2019 57 Our Value Creation Story Motivated Employees Training and education Further, policies, procedures, circulars, Training through e-learning and internal memos are initiated Training presents a prime opportunity by the respective departments, and We recognise and acknowledge the to expand the knowledge base of all issued centrally through the Operations capabilities and competencies of people employees. Hence, we continue to make Department to keep all staff informed of and bridge knowledge gaps through our staff aware of the values, principles, product developments. e-learning which enable staff to get the vision, and direction, in achieving our goals required information through electronic by providing in-house, on the job training, All procedure manuals and operational media rather than classroom training. and external training to the staff. policies are updated on a regular basis Following extensive e-learning were and circulated via email to inform all staff. provided during the year. One of the ways we nurture our talents is All of this information is also available on by continuous professional training and the Bank’s intranet for staff to access at development. It is an essential ingredient any time. to the progress of the individual, the achievement of their’s and ours objectives e-learning Modules – 2019 Number of participants Total hours and the ultimate success of the Bank. We implement a comprehensive development Know your customer and anti-money laundering 726 2,904 plan which includes technical and soft Service quality 790 3,160 skills training, leadership development, on Information security risk 722 2,888 the job training, experiential learning, and Impactful communication 670 2,680 counselling. Customer service 672 2,688 Foreign exchange guidelines 878 3,512 Annual/bi-annual appraisals are Seylan personal loans 779 3,116 carried out each year by their respective Leadership 416 1,664 managers, in order to review the Personal grooming 1032 4,128 employees’ current performance and also International trade 838 3,352 discuss their career development. Understanding Financial Statements for credit evaluation 411 1,644 Our Skills Development Centre carries Financial ratios analysis and interpretation 136 544 out the training of our staff according to Total 8,070 a training calendar that is based on the 32,280 requirements of the staff. The staff are kept informed of available training through the circulation of the monthly training calendar amongst all staff. Number and duration of training programmes Number of 2019 Number of Number of 2018 Number of programmes participants programmes participants Training Training Internal 178 hours 3,511 196 hours 4,967 External 116 317 109 251 Foreign 55,852 24 58,337 29 e-learning 19 3,054 20 3,870 Total 12 776 8,070 7 768 6,452 325 11,922 11,699 32,280 332 25,808 91,962 88,783 Training hours by type of training Number of 2019 Number of Number of 2018 Number of programmes participants programmes participants Training Training General banking practices 175 hours 1,426 183 hours 1,958 Professional development 23 432 25 488 Communication and negotiation skills 16 31,816 310 17 26,147 207 Marketing and marketing communications 21 4,206 315 23 4,882 671 HR management, staff/personnel development 38 2,890 707 40 2,918 820 Compliance and specialised areas 40 2,732 662 37 7,326 e-learning 12 7 1,103 Total 12,064 8,070 14,478 6,452 325 5,974 11,922 332 7,224 11,699 32,280 25,808 91,962 88,783

58 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Motivated Employees Average training hours by employee category 2019 Average training hours 2018 Average training hours 2017 Average training hours Male Female Total Male Female Total Male Female Total Corporate Management 18 2 20 14 6 20 10 6 16 Middle Management 22 10 32 20 12 32 17 12 29 Operational Management 38 24 62 36 26 62 32 28 60 Others 126 88 214 118 86 204 104 85 189 Training and Occupational Health hazard-free environment for our employees. development cost and Safety (OHS) Basic safety instructions are prominently displayed at Head Office and at all our LKR 44 Mn. The Management at Seylan Bank is branches. As a service sector organisation, responsible for organising occupational our employees are not exposed to the risk Total training and safety activities using an integrated of occupational diseases. development investment management system and in compliance % with statutory regulations. The health and Occupational Health and Safety 35 65 safety of our employees is of paramount (OHS) importance to us and we are vigilant about controlling the health, safety, and 2019 2018 2017 environmental risks in the workplace. We strive to provide a safe and healthy Staff Covered work environment for all employees. In order to strengthen employee relations by the health and maintain a zero-industrial dispute environment, we provide continuous Plan (%) 100 100 100 training on best practices in industrial relations to our employees. Occupational injuries NIL NIL NIL We also ensure that the Business Number of NIL NIL NIL Continuity Plan is in place and reviews it occupational annually to make sure that it creates a diseases Direct cost Indirect cost Number of lost days rate NIL NIL NIL Average 31.6 32.3 24.5 medical claims per employee (LKR ’000) Academic qualifications/professional qualifications holders, age wise and gender wise 2019 2018 Academic Professional Total Academic Professional Total qualifications qualifications qualifications qualifications 3 Age Female Male Female Male Female Male Female Male 211 646 20 or below 0010100 21 730 21 – 30 124 72 31 – 40 15 10 127 75 227 10 5 225 295 81 41 – 50 254 285 1,671 Above 50 50 82 216 282 630 51 75 Total 22 33 92 118 263 294 767 81 110 627 686 18 23 26 41 108 14 12 175 233 633 692 1,733 156 202

Seylan Bank PLC Annual Report 2019 59 Our Value Creation Story Motivated Employees Human rights Human rights policy Seylan Bank is committed to uphold the human rights standards enshrined in the Universal Declaration of Human Rights and the conventions of the International Labour Organisation (ILO). These cover the elimination of all forms of compulsory labour, the effective abolition of child labour, and the elimination of discrimination with respect to employment. Key performance indicators – Labour relations and human rights 2019 2018 Labour relations and human rights 3,030 3,104 90 93 CBEU and SBEU Membership Membership (%) 427 352 Number of hours of staff trained on HR policies and procedures relevant to operations The Bank’s code of conduct and its values Child labour, forced or compulsory labour, indigenous people’s embody its commitment to fair, ethical, rights, and assessments and responsible business practices, as it engages with its employees. Further, 2019 2018 2017 it strives to conduct its operations in a NIL manner consistent with the United Nations Number of incidents of discriminations NIL NIL Universal Declaration of Human Rights and NIL the International Labour Organisation’s Number of incidents from forced or NIL NIL NIL Fundamental Conventions. compulsory labour NIL NIL NIL Non-discrimination, freedom Number of child labour related issues NIL NIL of association, and collective bargaining Number of identified violations involving the rights of indigenous people We offer equal employment opportunity to all, does not tolerate discrimination Grievance handling mechanism Whistle-blowers protection or harassment and is proud to be a leader in supporting diversity and Our grievance handling process provides Our Whistle-Blowing Policy is intended to inclusion. We abide by labour laws and a mechanism for individual employees make it easier for staff members to report regulations including those that address to raise a grievance arising from their work in good faith, any serious irregularity, child labour, forced labour, equal pay, relationships. This process ensures that unauthorised activity which may have an and non-discrimination in our workforce. such grievances are dealt with promptly, adverse impact on the reputation of the fairly, and in a timely manner. In the case Bank, without having to fear that their Zero of a grievance, the staff member can raise actions may have adverse consequences incidents the matter with the immediate supervisor. for themselves. This Policy applies to If the issue remains unresolved it may all staff members and stakeholders of of discrimination,child be referred to the Bank’s Grievance the Bank, irrespective of their position, labour and forced labour Handling Committee. location, or seniority. The Whistle-Blowing Policy guarantees the maintenance We recognise the Ceylon Bank Employees A committee chaired by the DGM HR, of strict confidentiality of the whistle- Union (CBEU) and Seylan Bank Employees addresses all performance-related blower’s identity. Union (SBEU) in which 90% of our staff grievances. In addition, staff may raise across all grades are members, as a their grievances with their respective Security training consultative and supportive group that supervisors or send them directly to the creates a forum for collective bargaining, Employee Relations Manager. The Controller, Intelligence and Security, grievance handling, career counselling, of the Bank ensures that all the mandatory and creating a healthy atmosphere for We also have a system “Log Your Concern” basic training is provided by the respective its employees. where employees can log any HR-related security service provider to the security query or comment. We have undertaken personnel deployed at all Bank’s premises’ to respond to the logged concerns within throughout the country. 48 hours.

60 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Motivated Employees We also conduct training for security Initiatives to improve Future outlook personnel on customer care, to ensure staff well-being they fulfil their role satisfactorily at the We will focus on the following Head Office and at all branches. 50% We have implemented several programmes in the year ahead: of the security personnel have received to promote a sustainable work-life balance formal training in the organisation’s human for our employees: zz Decentralised training rights policies or specific procedures and e-learning with online and their application to the security zz A Business Continuity Plan to address competency certifications of the Bank. the safety of all staff in case of an emergency zz Forward-thinking intervention of Pending litigations reviewing the Branch Banking zz Safe drinking water with the dispenser management structure and Pending litigations against the Bank and a standard lighting system at Head making the required changes to is reported in Note 48 of the Office and at all the branches accommodate strategies in the Financial Statements. areas of branch supervision and zz Introduced flexi working hours which business execution Minimum notice period enable staff to adhere to a time frame which suits their personal as wells as zz Robust leadership development Human resource department ensures that official responsibilities campaign to have the second there are one to one discussions carried line of management pool in the out with employees and representatives zz Fire drills to create awareness and Bank for the succession of Trade Unions in terms of transfers, readiness amongst staff in the event promotions or any disciplinary actions. of an emergency. Team leaders, fire zz Workforce rationalisation for Three months’ notice in respect of senior wardens, evacuation wardens, at each enhanced productivity in Branch level employees and one month’s notice level of Head Office and branches Banking, processing centres, in respect of all other employees is to be appointed and instructed on each and introducing lean novel given when resigning from the Bank which of their roles when dealing with systems and processes help in order to minimise any adverse emergencies impacts arising out of operational changes. zz Embark on workplace culture zz Refurbishment carried out in assessment/audit and Head Office where many floors were transformation programme furnished with latest furniture and to strengthen the workplace employee friendly atmosphere to business culture and employee promoted the staff well-being in order engagement to work effectively zz Relocation and refurbishment of some branches to serve better customer service to value customers zz Provide staff loans at concessionary rates, subsidised lunch, medical facilities, holiday bungalow facilities etc. We employ a number of effective communication channels to ensure all the staff are aware of the Bank’s policies, procedures, and circulars Emails Intranet Circulars Staff Notice Board Managers Forum Trade Unions Whistle-blowers Seylan newsletter Employee Surveys

Seylan Bank PLC Annual Report 2019 61 Trusted Our Value Creation Story Partners We have a long history of building and nurturing strong relationships with various suppliers and business partners. Key Highlights 90% Over 500 Fair and locally registered correspondent transparency suppliers banks in procurement We are committed to the principles of transparency, integrity, accountability, responsibility, fairness, and compliance with all the laws that govern business activities in dealings with business partners. We continue to maintain quality of operational excellence and efficiency in the global payment community consisting of trade and remittances. As a result Seylan Bank was accorded a “special recognition award” by its USD correspondent Wells Fargo Bank, N.A. for the year 2018/2019. As per Wells Fargo Seylan Bank PLC is the only Bank to receive this award among the local banks in Sri Lanka, and the award was received for the third consecutive year. Memberships in industry associations We have acquired general membership and established alliances with various industry associations and organisations that enable us to be well informed of local and international best practices. Some of those institutes are listed below: The Institute of Chartered Accountants of Sri Lanka The Financial Ombudsman Sri Lanka Association of Banking Sector (CA Sri Lanka) (Guarantee) Limited Risk Professionals Chartered Institute of Management Accountants Sri Lanka Forex Association Association of Compliance Officers (CIMA) of Banks, Sri Lanka Association of Chartered Certified Accountants Securities and Exchange Commission of Sri Lanka Association of Professional Banks (ACCA) Sri Lanka (APB) Certified Management Accountants (CMA) Lanka SWIFT User Group (LSUG) Biodiversity Sri Lanka Sri Lanka Institute of Taxation The Sri Lanka Banks’ Association (Guarantee) Limited Lanka Clear (Pvt) Ltd. The Employers’ Federation of Ceylon (EFC) The Ceylon Chamber of Commerce Colombo Stock Exchange Credit Information Bureau (CRIB) The Clearing Association of Bankers The Institute of Bankers of Sri Lanka (IBSL) The National Chamber of Commerce Sri Lanka

62 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Trusted Partners In addition, we are maintaining relationships with over 500 correspondent banks globally which also includes some of the largest international financial institutions: Close connectivity Representatives of the following banks visited Seylan Bank in 2019 and resulted in strengthening of the relationships that exist between the two organisations: 1. Bank Dhofar, Sultanate of Oman 7. Gulf International Bank, Bahrain 13. Bank Muscat, Sultanate of Oman 2. Banca UBAE, Italy 8. Mashreq Bank, Dubai 14. Caixa Bank, Spain 3. Al Khalij Commercial Bank, Qatar 9. BNP Paribas, France 15. Zurcher Kantonal Bank, Switzerland 4. Commerz Bank, Frankfurt 10. Almasraf Bank (Arab Bank for 16. Helaba Landesbank Hessen-Thüringen 5. Wells Fargo, New York Investment and Foreign Trade), UAE Girozentrale, Frankfurt 6. UBAF, France 11. Deutsche Bank, Frankfurt 17. Aktif Bank, Turkey 12. First Abu Dhabi Bank, UAE Relationship more than 15 years Canada USA Toronto New York New York New York New York Philadelphia Royal Bank of Canada Deutsche Bank Mashreq Bank Standard Chartered Bank January 1993 Trust Company – NY January 2000 March 1996 Standard Chartered Bank Wells Fargo Bank January 1993 Denmark – DBU May 2001 Copenhagen Danske Bank March 1996 May 1994 England Norway Germany Frankfurt Italy India Commerz Bank London Oslo Chennai Frankfurt April 2002 Milano Bank of Ceylon DNB Nor Bank Bank of Ceylon Deutsche Bank AG Unicredito Italiano January 1993 January 1993 January 1996 January 2000 March 2002 UAE Saudi Arabia Mumbai South Korea Hongkong Standard Chartered Bank Dubai Riyadh January 1996 Seoul Hongkong Mashreq Bank, Dubai Saudi British Bank Korea Exchange Bank Standard Chartered January 2000 April 1996 September 2001 Bank March 1998 Singapore Singapore Singapore Australia New Zealand Pakistan United Overseas Bank Overseas Chinese Singapore December 1995 Banking Corporation Melbourne Wellington Karachi Standard March 1996 National Australia Bank Bank of New Zealand Standard Chartered Chartered Bank January 1993 May 1993 Bank August 2000 June 2004 Japan Tokyo Wells Fargo Bank April 2004 Relationship between 10-15 years UAE Dubai Abu Dhabi Emirates NBD First Abu Dhabi Bank September 2008 February 2009 Relationship between 5-10 years USA UAE China South Korea Bangladesh Oman New York Dubai Shanghai Seoul Dhaka Muscat Standard Chartered KB Kookmin Bank – Habib American Bank United Bank Limited Bank South Korea Standard Chartered Bank Bank Dhofar August 2013 October 2013 October 2011 August 2011 October 2011 October 2014 Relationship less than 5 years England Sweden Switzerland China London Stockholm Zurich Shenzhen Standard Chartered Danske Bank Bank December 2015 Zurcher Kantonal Bank Agricultural Bank of China August 2017 September 2015 Limited (ABC) March 2016

Seylan Bank PLC Annual Report 2019 63 Our Value Creation Story Trusted Partners New relationships The supply chain management We require suppliers to adhere to the and procurement policy following guidelines when dealing with In the course of the Bank. business during the year We follow a fair and transparent process the Bank established when purchasing goods and services whilst zz Ensure practices are in place to new relationships with ensuring the selection of service providers eliminate money laundering and the following banks: of goods and services is done in a malpractices that can have a negative non-discriminatory and economically impact on the Bank’s reputation. 1 Credit Europe, Netherlands sound manner. All the suppliers’ information is treated as private and zz Conduct their businesses in a way that 2 Standard Chartered Bank, confidential in accordance with Bank’s enhances the lives of the people and Taiwan sustainability strategy and corporate the communities they operate in. procurement strategy. 3 BNP Paribas, France zz Adhere to Standard labour practices We have so far not identified any incidents such as fair remuneration and safety, 4 Aktif Bank, Turkey of forced or compulsory labour practices or and operate in a hygienic environment. child labour issues amongst its suppliers. Credit lines zz Respect human rights and give proper We work with local and global suppliers to hands on training to their staff to enable New Inter-bank limits ensure they can provide the right goods them to perform their jobs safely In a were established with the and services for our business, efficiently. hazard free environment. following banks: We always promote cost reduction zz Ensure all relevant policies relating to 1 Credit Europe, Netherlands strategies within the Bank. As a result, laws and lawful payments, including we always favour recycling and reuse forced, involuntary, child labour, and 2 BNP Paribas, France of supplies whenever possible. System discrimination practices are in place. based inventory management system has 3 Aktif Bank, Turkey been implemented in order to manage Locally based vicinity when consumeble usage among branches and selecting suppliers Sharing mutual benefits departments. With the implementation of inventory management and mail We prefer to source its requirements from We participated in events that proved to management modules, we managed to local suppliers as part of its commitment be of mutual benefit to Seylan Bank and eliminate records which will impact on to helping local communities and other organisations: carbon footprint. businesses flourish. 90% of the suppliers 1. Embrace Change – The New Constant – are from local communities. We use local suppliers in the provision of services such conducted by Mashreq Bank, Dubai as janitorial, security, mail room, catering, which covered the latest developments stationary etc. in the banking sector including Artificial Intelligence/Digitalisation, Cost of services obtained locally 2019 2018 2017 Compliance/Regulatory Environment, LKR Mn. LKR Mn. LKR Mn. Cyber Security, SWIFT Initiatives, and Tea and coffee Treasury Opportunities/Solutions. Subsidised lunch for staff 37.25 39.22 35.07 Supply of foliage/maintenance of fish tanks 61.18 60.70 59.16 2. Workshop on SWIFT, Global Payment Janitorial and courier services Settlements, Clearing and Digitalisation Repair and maintenance 2.92 3.35 4.12 Capabilities – 2019, conducted by Drinking water 98.06 92.82 84.35 Standard Chartered Bank, Colombo at Newspaper 22.95 19.21 25.77 Cinnamon Lakeside Hotel, Colombo. Security 12.41 11.28 10.85 Total 3. Correspondent Banking Workshop 3.47 3.46 3.31 for South Asia Banks – organised 351.35 337.35 300.06 by Standard Chartered Bank held 589.59 567.39 522.69 in Chennai, India. Future outlook 4. Correspondent Banking Compliance Forum for Banks – organised by zz We will continue to strengthen the networking and strategic alliances Standard Chartered Bank, Colombo and build long lasting strategic relationships with their existing business held at Hotel Kingsbury. partners and suppliers 5. Regional Correspondent Banking zz We will continue to promote ethical practices among its suppliers and Event in Vietnam – November 2019, encourage them to reduce any negative impact on the environment they for Correspondent Banks – South operate in Asia Region organised by Standard Chartered Bank.

64 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Responsible Corporate Citizenship Our corporate protocols and sustainability are intertwined and factored into business models to reach wider community and foster their socio-economic livelihood whilst paying due attention to safeguard the environment. Key Highlights 112 Nos. 3,478 Nos. 200 Nos. Engagement Customers in activities Microfinance sector “Seylan Pahasara” with kids libraries 22,148 Nos. LKR LKR 15.37 Mn. SME customers 8.81 Mn. Contribution on community projects Investment on education-related pursuits

Seylan Bank PLC Annual Report 2019 65 Our Value Creation Story Responsible Corporate Citizenship Integrating sustainable community development into business strategy Community policy Our closeness in catering to all walks of life Senior citizens In addition to preferential returns paid on deposits of senior citizens we avail them the required comforts meeting their needs and wants as a real care beyond service. “The Bank is committed to community development and believes “Seylan Harasara” and “Mega Rewards it to be a process of empowering individuals and groups to Scheme” further adds value herein. improve their livelihood within their community as opposed to Youth, women, and entrepreneurs fostering dependency. The Bank seeks to progressively shift its Our products and services are voluntary CSR activity into the realm of meaningful sustainability.” attuned to the pulse of youth, women, and entrepreneurs and their empowerment stays at the heart of Product development and innovation of our Bank creates enough our business strategy. space to support financial inclusiveness availing needy and deserving community groups to reach formal channels and derive Minors multitude of benefits in a sustainable manner. We identify minors as future stakeholders of present stakeholders and committed to nurture their financial aspirations whilst preserving the planet earth safe and clean for them. Various engagement activities with them today may follow the momentum. 13 Bank upholds instrumentalism in expanding SME hubs to effectively cater to financial needs of SME segment whose proximity to the Bank is enhanced as means SME Hubs Fostering entrepreneurship of promoting financial literacy and minimising geographical distance, while close and financial inclusiveness supervision, continuous advocacy, monitoring, and evaluation nurture momentum. Loans under refinance scheme Loans granted in 2019 Loans granted in 2018 Scheme Donor(s) Eligible sector(s) Number of Amount Number of Amount loans LKR Mn. loans LKR Mn. Small and Medium Line Asian SME 83 1,213.73 37 524.87 of Credit (SMELoC) Development Bank 9 50.43 14 116.70 “Saubagya” prosperity GOSL SME loan scheme Small and Micro Industry Leader Japan Bank for and Entrepreneur promotion International project (SMILE III) Cooperation (JBIC) SME 22 213.21 34 146.84 7 3.80 8 8.27 “Kapruka Ayojana” GOSL/CBSL Coconut cultivation “Athwela” GOSL/CBSL Economic activities affected by natural disasters – – 20 9.95 ––– – “Swashakthi” GOSL/CBSL Micro Small and Medium Entrepreneurs (MSME) Commercial scale dairy GOSL/CBSL Commercial scale dairy development loan scheme farmers and processors of dairy products –– –– Rooftop Solar Power Asian Development Solar power generation 118 158.76 1 2.50 Generation Project Bank Environment friendly loan Japan Bank for Businesses to minimise scheme (e-friends) International waste/pollution Cooperation (JBIC) 4 42.51 – – GOSL – Government of Sri Lanka CBSL – Central Bank of Sri Lanka

66 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Responsible Corporate Citizenship Loans under interest subsidy scheme Loans granted in 2019 Loans granted in 2018 Scheme Donor (s) Eligible sector(s) Number of Amount Number of Amount loans LKR Mn. loans LKR Mn. Green Loan Scheme GOSL Small scale tourist guest 4 11.85 1 2.50 houses/homestay projects 90 1,925.33 42 698.53 “Jaya Isura” GOSL “Ran Aswenna” GOSL SME 15 725.01 2 202.39 “Rivi Bala Savi” GOSL Cultivation/Agriculture 5 1.63 4 1.40 processing 2 0.85 –– “Govi Navoda” GOSL New comprehensive GOSL/CBSL Residential solar power 602 91.85 733 118.86 rural credit scheme generation 10 1,041.15 –– Working capital loan for tourism GOSL – Government of Sri Lanka Agriculture/Cultivation Agriculture GOSL Tourism CBSL – Central Bank of Sri Lanka A key priority for the Bank has always Better education Better education and health been giving back to the communities and health within which we operate. Just as we derive “Bank’s engagement with kids” intangible value in the form of goodwill Financial inclusivity and brand strength from the community, Women and youth Bank spurs learning experience of kids through the Bank’s Board Sustainability empowerment through various educational activities. Committee policies we also find Daily fairs give them some experience meaningful ways in which to deliver value. Enhancement of to do simple transactions and inculcate financial literacy the habit of savings. Their interaction with Our support and contribution to the Bank’s staff during kids banking days and national sustainable development other connected activities may familiarise goals include: them for the banking environment and support to be a simple way forward to develop financial literacy. 3 Bank has been always catering to the 3 changing trends and needs of the generations and Kids talent shows City double decker and drama augments the product with an impressive, tours and fun events novel, and innovative gift scheme. 7 12 Kids safari and Kids carnivals/ educational trips play area 27 22 Magic shows/kids Art competitions educational movie shows/cultural day 4 34 Kite festivals Kids banking days/ “Tikiri” fairs/ Tikiri programmes

Seylan Bank PLC Annual Report 2019 67 Our Value Creation Story Responsible Corporate Citizenship Financial inclusivity be active financial participants in the capacity together with flare for marketing economy who contribute to growth which helps them to meet international Mini bankers from student perspectives. Our 13 SME hubs are demand and prosper accordingly. Our saving centres attuned to identify the needs and wants SME hubs too are accustomed to take and fulfill those through various refinance forward the dialogue and support the We have 98 student saving centres and subsidised loan schemes while branch network to be liaisons therein. spread across schools island-wide having providing required assistance. initiated adequate links with students Touching grassroots through as a future potential community segment Enhancement of Village Adoption Concept in the economy. financial literacy Nurturing livelihood of villagers by way of Women and youth empowerment “Empowering potential exporters ” availing their children with educational support, Bank donated books and “SME capacity building targeting The Bank joins hands with the Industrial stationery and coupons to buy pairs women and youth” Development Board (IDB) to educate of shoes to 52 students of Devamulla entrepreneurs in the vicinity to create Primary School. Parents appreciated the We meet the needs and wants of women potential exporters by way of providing Bank for making the donation for the ninth and youth by way of availing required know how to increase their production consecutive year. financing and empowering them to “Reviving libraries in schools as stores of future wealth” The Bank completes 200 libraries across every province of our country Liaise with education offices in locality Reaching How we plan ahead when identifying the needy schools 200 We want to make sure the Students together with parents, education centric journey has principals and teachers benefit mutually needy locations across been sustainable once this and join hands sustainably the island initiative is completed after reaching 250 libraries Deploy our wide branch network and e-learning on board by 2020 passionate staff to reach needy schools content in geographical sphere zz Meet school principals and via computers and area education officials to Revive run down libraries to be future other equipment evaluate functionality and potential educational tool benefits derived therein more than by students through our Replenish libraries with books to foster branch network the syllabus and also other subjects 40,000 promoting total quality education zz Carrying out revisits on books national basis on the Support parents and school authority condition of the library to join hands with us and develop their Engagement with and required replenishment children as leaders equipped with many present and of books knowledge, skills, and more importantly future students positive attitudes 36 Revisits Tree planting initiative is coupled rotationally herein to induce care for environment from school age to replenish with books and infrastructure Support for exams Nurturing victims to rebuild their assistance at the time of educational needs and help rebuilding their lives and The Bank intervenes to conduct seminars The Bank signed a Memorandum of to achieve life’s goals as independent and for scholarship, O/L and A/L examinations Understanding to support deserving responsible individuals. in rural areas with a view to helping children of victims of Easter Sunday Attack, students to face exams with better mostly who are residents near churches in The Bank believes that this shelter of confidence. Colombo and Katuwapitiya. Through this sharing and caring would assist them engagement their education will be looked as essence in developing exceptional after for 15 consecutive years availing personalities vitalised with positive required financial assistance. With the attitudes that may lead to an exemplary intervention of the guardian we will be of and peaceful life ahead.

68 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Responsible Corporate Citizenship Island-wide distribution of new libraries and revisits completed during the year and total distribution since inception Central Year Overall Northern Eastern New Revisits New Revisits North Central 23 North Western 01 29 8 23 Northern 00 24 3 Sabaragamuwa 30 15 4 North Central Southern 22 18 6 Uva 20 23 3 North 3 15 Western 30 15 2 Western Total 21 15 3 4 00 11 2 51 50 5 22 17 5 200 36 18 6 Central 24 1 3 50 29 Eastern 53 8 Uva 11 5 1 15 2 2 Western Sabaragamuwa New libraries during 2019 Total library projects since inception 2 15 3 Southern Revisits during 2019 Total revisits since inception 1 Individual social responsibility goes hand in hand with corporate social responsibility The Bank always encourages a culture that spurs The Bank donated medical equipment and volunteerism and self-visualisation how an individual medicine to “Apeksha” Hospital for the become instrumental in shaping a perfect role that aligns fourth consecutive year where children and well with corporate social responsibility since passionate needy adults were benefited as a need engagement become an essence there. of the hour. Our team was accompanied with a veteran oriental music group to Delivering high accord of professional and responsible have entertained patients, care takers and service with total compliance to regulatory and other hospital staff. requirements are deemed to be of utmost important and we ensure every staff member is equipped with necessary The Bank makes sponsorships on various training as a resolute internal control and good corporate community needs that are considered as governance. bridges of relationship as tabulated on page 69. Training for being compliant 2019 2018 Internal/External – Local/Foreign Number of Number of Number of Number of programmes participants programmes participants General banking practices 175 1,426 183 1,958 Anti-money laundering/KYC * 726 * 1,223 System security * 722 * 1,182 Accounting/auditing/compliance and specialised areas 40 662 37 1,103 * Online training platform developed herein KYC – Know your customer/customer due diligence

Seylan Bank PLC Annual Report 2019 69 Our Value Creation Story Responsible Corporate Citizenship Our responsible role as a corporate citizen Compliance Level/status of compliance and actions taken Percentage and total number of business units analysed for risk in relation to corruption and the Prevailing gaps are identified through examining audit trails and the training programmes percentage of employees trained in the Bank’s as listed below which enforces good corporate governance internally. Code of conduct is anti-corruption policies and procedures signed by every employee and shoulders the responsibility herein. Actions taken in response to incidents of corruption Stringent controls, internal audit procedures, and staff disciplinary codes in all operations Participation in public policy development are enforced. Total value of financial and in-kind contributions At the invitation of the Government, the Bank presents proposals and engages in formulating to political parties and politicians new policies for consideration and inclusion in the Government Budget and tax laws, Sustainable Banking Initiative of SLBA, development of sustainable financing roadmap Number of legal actions taken for of Central Bank of Sri Lanka, implementation of Accounting Standards particularly SLFRS 9 anti-competitive behaviours and SLFRS 16. Monetary value of significant fines and total No contributions were made to political parties or politicians. During the course of business, number of non-monetary sanctions for all business of the Bank was conducted at arm’s-length. The Bank has a policy on Politically non-compliance with laws and regulations exposed persons and maintain strict adherence to same. The Bank consistently complies with the country’s laws and regulations in conducting its marketing campaigns. Truth in advertising is followed when displaying banners, conducting sales campaigns, road shows, and using public address systems. No legal action was taken against the Bank for anti-competitive behaviour during the year. No fines or non-monetary sanctions were made against the Bank during the year. All laws and/or regulations applicable to the Bank were complied with. To enable effective monitoring, a monthly compliance report is tabled at Board meetings. The Bank honours the call of community through various sponsorships that are in line with pro bono and commercial interest. Please refer table below: Sponsorships as a bridge of relationships Centre of attention Amount of Impact/Value delivered Type of sponsorship engagement Educational pursuits of schooling children LKR Mn. P, C Entrepreneurship development and capacity building 2.11 Foster development through attributes of total quality education Environmental pursuits Events of banking and other 1.60 Support transitioning towards a entrepreneurship based economy with P, C professionals better financial literacy levels and least information asymmetry Musical cultural, community health P, C and recreational activities including 0.52 Spur positive attitude towards natural environment we share in common P, C special need persons Religious observances and 2.67 Close relationships and collaborations for updated knowledge, skills, and P related encounters professional credo Social and other events of past pupils of schools 3.85 Encourage impactful break from stress and social unrest for better Sports and physical fitness psychological blends of balanced life Total 0.72 Promote peaceful life, revival, and religious co-existence P 0.12 Avail better networking opportunities to students and school authority who are P, C 0.99 bound to the school morally P 12.58 Enabling physique of the community as an essence that upkeep socio-economic resilience P – Pro bono C – Commercial Future outlook zz We are in the process of developing a three-year sustainability strategy that focuses on transforming lives and communities by identifying material stakeholders and addressing their diverse interests in a sustainable manner zz Having incorporated the feedback of our stakeholders we ensure that our goals are aligned with the Bank’s business strategy. Keeping strategic intent well in line with Environmental, Social, and Governance frameworks we strive to contribute towards the relevant National Sustainable Development Goals zz The Bank will also transition to the digital age while keeping tab on the pulse of every stakeholder group in order to meet their diverse stakeholder needs and wants

70 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Environmental Stewardship Preserving the planet and environment surrounding our business have been a continuous dialogue in our financial decision making which would not compromise the ability of our future generations Environmental Policy We have a long standing commitment to minimising both the direct and indirect impact on our environment arising from our business activities, whilst at the same time doing everything we can to protect and replenish the natural resources around us. Accordingly, the Bank ensures not only are its products and services compliant with applicable environmental and social impact but also the projects it supports during the normal course of business. Key Highlights 4,630 kgs 1,734 Nos. e-waste destructed/recycled trees saved 3,242,386 litres 20,405 kg Water saved Carbon footprint reduced We monitor engagement with our Our skilled and passionate human capital the environment. However, we take action stakeholders and have put in place is the key to unlocking environmental to mitigate the indirect environmental and processes to assess direct and indirect and social resilience while ensuring the social impact caused by various customers environmental and social impact based on economic stability of the Bank. whom we finance and who may have significance and probability of occurrence. mismanaged environmental and social We work towards reaching benchmarks risks associated with their businesses. As illustrated below, environmental and set for energy efficiency while also Environmental and social due diligence social headwinds and tailwinds, the reducing emissions and waste. We also on the nature of the businesses that the Bank’s ideological, environmental, social pay attention to the conservation of water Bank deals with, is carried out through and governance (ESG) framework play which is a scarce natural resource. These the Bank’s exhaustive Environmental a pivotal role in the management of the targets are achieved by transforming and Social Risk Management System Bank’s ecological footprint. Accordingly, our processes and service delivery (ESMS). The System is in compliance with action plans are documented following into state-of-the-art digital interfaces national environmental and social laws the agreement of the Board Sustainability which are also welcomed by our diverse and regulations, International Finance Committee in order to provide society stakeholders. Corporation (IFC) performance standards, with an understanding of our business International Labour Organization (ILO) engagements and our intentions in Our intermediary business of banking does core labour standards, equator principles preserving the environment. not make a detrimental direct impact on and other industry specific regulations.

Seylan Bank PLC Annual Report 2019 71 Our Value Creation Story Environmental Stewardship The Bank offers and encourages finance Sustainable Banking initiative as a move across entire financial service sector to those companies who are assessed to towards creating a level playing field which would help economies to transit be environmentally friendly in their business across the banking industry in terms of from black to green and remain practices to encourage them to continue carrying out environmental and social environmentally and socially resilient. and enhance the positive impact they make risk assessments and due diligence. This on the environment and society at large. initiative is acknowledged by the Central Bank of Sri Lanka as a prelude to align Seylan Bank PLC became a signatory with sustainable financing roadmap where to the Sri Lanka Banks’ Association common E & S dialogue encouraged Environmental and Social Governance (ESG) framework results in higher value creation E ENVIRONMENTAL TAILWINDS ENVIRONMENTAL HEADWINDS zz Energy conservation zz Energy and resources used zz Paperless digital operational interface zz Material used – mostly paper zz Paper recycling zz e-Waste zz e-waste destruction/recycling zz Mismanaged environmental risks of zz Waste management zz Negated/mitigated environmental risks borrowers zz Climate change impacts in our asset base zz Carbon footprint and water footprint zz Implementation of ESMS and SLBA SBI zz GHG emissions zz Environmental grievance handling Tailwinds SOCIAL HEADWINDS Headwinds mechanism zz Mitigated climate risks zz Social grievance due to our borrowers in zz Efforts to reduce emissions, carbon case of mismanaged social risks footprint and water footprint zz Social unrest/ethnic grievances zz Labour issues SOCIAL TAILWINDS zz Unfavourable working conditions zz Negated/mitigated social risks in GOVERNANCE AS G our asset base A GAME CHANGER zz Promotion of communal co-existence zz Implementation of ESMS and SLBA SBI through various CSR initiatives and complying with national E and S Laws, pro bono sponsorships rules and regulations, IFC performance Standards, ILO Core Labour Standards, zz Employees’ and customers’ grievance Equator principles and industry best handling mechanisms practices and standards and required capacity building and review zz Maintenance of conducive working environment, creation, and retention zz Better internal system of practices, of content staff controls, and procedures in broader perspectives of sustainability zz Gender equity and equal pay zz Encourage staff for new idea generation S and innovate the workplace ESG is an inextricable element about parties well before contingencies take Water conservation how we do our business. Though E, S place but assessing warning signals and G indicators are seen as individual well ahead of times. Creating a positive elements those are intertwined to foster impact one over the other in broader concerns of Our current environmental initiatives would sustainability. We maintain good internal pave way to commensurate the outcome governance as a stringent surveillance with National Sustainable Development mechanism to negate or mitigate E & S Goals as depicted as follows: risks and persuade dialogue between

72 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Environmental Stewardship ESMS of our Bank harnessed with the Sri Lanka Banks’ Association Sustainable Banking Initiative (SLBA SBI) Mismanaged environmental Can be transferred from and social risks reported client’s books to Bank’s by customers books and books of economy We will assess customers’ ESMS of Seylan Bank With an environmental and social Currently we are phasing out implementation effective ESMS, (E & S) literacy level, of the ESMS while addressing concerns of environmental commitment, and track respective business units. Customer feedback and social risks records to assess their is being considered to help shape it as a compliance levels sustainable business case as opposed to mere are mitigated paper driven compliance Accepted action plan to Mitigated credit close E & S gaps if any SLBA SBI risk, reputational and capacity building Being a signatory to 11 sustainable banking risk, collateral programmes principles our staff are now availed to make risk, legal risk, use of e-learning platform facilitated via etc. if any having Gradually building up www.sustainablebanking.lk where required ensured asset E & S culture across the capacity building is geared detailing the quality. better Board that fosters E&S procedures as per the implementation guide E & S risk resilience which transforms already accepted by the Bank management banking from black to and financial green and also economies International Finance Corporation resilience as a Performance Standards whole International Core Labour Standards Equator Principles relevant nation E & S laws and regulations Paper conservation zz Loan Originating System to replace year. The Bank has not sold out energy paper-based credit evaluation forms to national grid. We continuously asses our work processes and limit the usage of paper which is used zz Staff reimbursement claims on some Steps taken to reduce energy excessively due to inevitable nature of our utility bills were automated consumption: business. The steps taken are; zz Reuse the paper until it reaches the zz Assess air conditioner efficiency based zz CDMs increased up to 40 reducing point of recycle on number of heating units, staff, and use of deposit slips British thermal unit requirement zz Recycling as a mean of restoration zz Use of iPad for paperless connectivity zz Interior and exterior illumination for Board meetings and passing zz Reform processes into digital interface provided by LED resolutions ensuring user literacy and capacity zz Pay due attention to the layout zz e-learning platform used by staff zz Print material documents with reduced and building insulation when font size constructing new branches and zz Internal communication through the shifting to new locations intranet, email, and e-flyers Energy conservation zz Create awareness and capacity zz Biometric attendance system on every Our main energy source has been national building on energy conservation department floor of Head Office grid electricity – total consumption during year 2019 has been 8.41 Mn. of kWh zz Monitoring system to keep desk zz Introduced a new product called “Bank with a reduction of 0.11 Mn. of kwh after computers in sleep mode when on a laptop” where considerable paper having opened three branches during the staff leave office (Supervision to applications are switched into e-papers. assist conservation)

Seylan Bank PLC Annual Report 2019 73 Our Value Creation Story Environmental Stewardship zz Utilising teleconferencing facility to Year and water usage in units (U) per employee (e) [U/e] curtail various staff travel including travel on customer engagements Surface or ground 2019 U/e 2018 U/e 2017 U/e water*, municipal or 77,370 23 77,226 23 77,685 24 zz GPRS system installed to Bank’s vehicle private water fleet which allows to monitor idle time and helps maintain * Use of surface of ground water is minimal travel records more accurately with better control Supplier chain management zz Hybrid and electric vehicles are We assess the behaviour of suppliers in relation to environmental friendliness. When used/hired based on the nature and goods are procured, the Bank insists that suppliers comply with local environmental laws, distance of travel rules, and regulations. Tenders are called for and contracts made based on the volume and awareness of environmental impact. Waste management Environmental grievance mechanism Steps taken: The environmental grievance mechanism is guided by our ESMS and we have not zz Sensitise staff on controlled use confronted any issues during the year. of plastic material Creating a positive impact zz Segregation of waste as per the requirement of the Government Our core books create a positive impact on the environment by way of funding renewable in a more passionate way energy projects. zz Reduction of print cartridges The following projects were financed by us having been able to derive positive results as parallel to digitalisation tabulated below: e-waste management Type of the power project Hydro Solar 2 4* Steps taken: Number of loans as at 31 December 2019 Total amount granted as at 31 December 2019 547 427 zz Donation of 250 usable computers Total production capacity (MW) 3 5* during the year to rural schools after Total green power generation (GWh) positive impact deleting sensitive data, thereby to the environment in 2019 8.2 5 reducing the speed at which e-waste is * One project under construction (capacity – 2MW) accumulated and to promote IT literacy of students simultaneously. zz 4,630 kgs of e-waste destucted/ recycled through a registered body in compliance with rules and regulations of related environmental authority and basel convention. Biodiversity conservation Other refinance and subsidy renewable energy loans are listed on pages 65 and 66 respectively. Our products and services do not harm ecosystems and our operational sites Future outlook owned, leased or managed are located away from protected areas of biodiversity. zz Discussions are underway to introduce an on-line vehicle booking system We enforce our commitment through ESMS backed by a card system to screen our lending propositions with a view to protecting the interests of the zz Discussions are carried out to develop a long-term sustainability strategy International Union for Conservation and for the Bank where environmental consideration are versed into effective Nature (IUCN). Our operations do not harm action plans red list species or species on the national conservation list. zz Staff commuting on attending training programmes and regional meetings will be further curtailed by way of facilitating same with teleconferencing Water conservation facility instilled While the staff is encouraged to be more conscious in preserving water, the Bank’s water usage has been consistent although number of staff got increased together with business expansions the year recorded with three new branch openings.

74 Seylan Bank PLC Annual Report 2019 Our Value Creation Story Environmental Stewardship Sustainability performance indicators Stakeholder Indicator of performance Achievement Indicator group Investors Economic value added 2019 2018 2017 2016 2015 (LKR Mn.) Customers Profit after tax (LKR Mn.) 15,282 14,443 14,443 12,290 11,710 GRI 201-1 Earnings per share (LKR) 3,680 3,189 4,430 4,010 3,831 GRI 201-1 Employees Return on equity (%) 8.99 7.97 11.07 10.02 9.57 GRI 201-1 Return on assets 9.29 9.27 14.30 15.18 15.62 GRI 201-1 Dividend per share (LKR) 0.75 0.73 1.16 1.23 1.40 GRI 201-1 Customer deposits (LKR Mn.) 2.00 2.50 3.50 3.25 2.75 GRI 201-1 Number of KYC anti-money GRI 102-7 laundering programmes 400,731 357,560 307,099 273,456 224,525 [NJ/participants (P)] Penalties arising from 726P 1,223P 36N 14N 8N GRI 205-2 non-compliance of laws Nil GRI 206-1 Nil Nil Nil Nil Number of banking centres Number of ATMs 173 170 166 166 159 GRI 102-6 Total customer advances 215 207 205 202 182 GRI 102-6 (Gross) (LKR Mn.) Number of housing loans 389,991 336,775 286,469 242,073 198,942 GRI 102-7 Value of housing loans (LKR Mn.) 5,703 5,738 5,698 5,864 5,934 GRI 102-7 Housing loans to total loans (%) GRI 102-7 Number of “Tikiri” kids events held 16,765 15,690 13,500 12,515 11,059 GRI 203-1 Number of student saving centres 4.30 4.66 4.71 5.17 5.56 GRI 413-1 Number of customer complaints 104 136 123 162 170 GRI 102-6 98 98 98 100 95 GRI 418-1 Turnover rate (%) 60 74 74 74 63 (Including sales staff) Permanent employees (%) 9.26 6.84 4.53 4.32 4.11 GRI 401-1 Average benefits per employee 88 89 92 88 92 GRI 102-8 (LKR 000) Staff covered by health plan (%) 1,932 1,729 1,624 1,457 1,360 GRI 405-2 Women employees (%) 100 100 100 100 100 GRI 403-1 Women in corporate and middle 43 43 42 43 43 GRI 405-1 management (%) Union membership (%) 28 27 22 29 27 GRI 405-1 Number of pending human rights 90 93 98 93 93 GRI 102-41 cases against the Bank Number of participants on Nil Nil Nil Nil Nil GRI 419-1 external and foreign training Ratio of standard entry level wage 341 280 373 361 341 GRI 404-2 Above Above Above Above GRI 202-1 Proportion of Senior Management minimum minimum minimum minimum Above from local community (%) minimum 100 100 100 100 100 GRI 202-2

Seylan Bank PLC Annual Report 2019 75 Our Value Creation Story Environmental Stewardship Stakeholder Indicator of performance Achievement Indicator group Contribution on community 2019 2018 2017 2016 2015 Community projects (LKR Mn.) Contribution on education-related 15.37 8.81 11.19 17.50 7.80 GRI 413-1 pursuits (LKR Mn.) Number of loans granted under 8.81 14.70 15.14 16.70 11.06 GRI 413-1 “Seylan Scholar” Number of SME loans 17 24 37 63 61 GRI 413-1 Value of SME loans (LKR Mn.) 22,148 26,161 15,990 14,605 13,367 GRI 413-1 Number of micro finance loans 100,708 93,882 84,647 80,917 54,021 GRI 413-1 Value of micro finance loans (LKR Mn.) 3,478 1,704 − − − − 837 220 − − − − Purchases from locally based 589.59 567.39 522.69 502.52 385.57 GRI 204-1 supplies (LKR Mn.) Suppliers Environment Electricity consumed, 8,413 8,518 8,767 9,165 9,362 GRI 302-1 (Units kwh) 000 2,503 2,547 2,741 2,896 3,034 GRI 302-1 Electricity consumption – 77,370 77,226 77,685 79,335 81,828 GRI 303-1 units per employee (kWh) 23 23 24 25 27 GRI 303-1 Water consumption – Units 74,626 63,447 63,210 71,674 62,251 GRI 302-1 11,426 16,860 18,359 17,386 21,382 GRI 302-1 Water consumption – 52,940 56,442 45,962 42,990 35,400 GRI 302-1 Units per employee GRI 302-1 767 480 680 685 481 GRI 305-1 Generator diesel consumption (litres) 668,725 586,183 511,523 396,625 545,002 NA Vehicle petrol consumption (litres) 23,984 24,215 23,725 23,498 21,000 NA 287,808 290,580 284,700 281,976 252,000 NA Vehicle diesel consumption (litres) GRI 306-2 126 130 130 141 132 Lubricant consumption (litres) 102,026 63,892 141,624 102,237 107,055 GRI 306-2 GRI 306-2 Total business travels (km) 1,086 2,408 1,738 1,820 GRI 306-2 2,030,488 4,500,811 3,249,092 3,402,208 GRI 306-2 Number of A4 paper purchased – GRI 306-2 Packets 250,568 566,496 408,948 428,220 GRI 306-2 112,130 248,550 179,426 187,882 Weight of A4 paper (kg) 192 425 306 321 A4 packets usage per business unit 12,778 28,325 20,447 21,411 Waste paper recycled (kg) Savings from recycled papers 1,734 Trees (No.) 3,242,386 Water (litres) Electricity (kWh) 408,104 Oil (litres) 179,056 Land fill (cubic meters) Carbon footprint (kg) 306 20,405 Income tax (LKR Mn.) 1,418 1,477 2,226 1,723 1,946 GRI 201-1 2,767* 2,113* 1,895 1,349 1,256 GRI 201-1 Value added tax and nation building 53* 53* 48 43 46 GRI 201-1 Government and tax on financial services (LKR Mn.) Government Institutions Total Tax (VAT/NBT and income tax % of PBT) * Includes debt repayment levy.

76 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Board of Directors 1. Mr W M R S Dias – Non-Executive Director/Chairman Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience FCIB (UK), LLB, Hubert 29 May 2015 as a Board Nomination Committee, Board Senior Banker with long years of banking H Humphrey Fellow Non-Executive Director Governance and Compliance Committee, experience who last served as the Managing and was appointed as the Board Integrated Risk Management Director/Chief Executive Officer of Commercial Chairman on 9 May 2016. Committee, and Board Marketing and Bank of Ceylon PLC. Mr Dias has served on the Product Development Committee. Boards of Commercial Development Company PLC, Commercial Insurance Brokers (Pvt) Limited, Lanka Clear (Pvt) Limited, Lanka Financial Services Bureau Limited, and was a Council Member of the Employers’ Federation of Ceylon. Mr Dias presently serves on the Boards of many corporates. 9 11 8 12

Seylan Bank PLC Annual Report 2019 77 Sustainable Stewardship Board of Directors 2. Mr W D Kapila Jayawardena – Non-Executive Director/Deputy Chairman Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience MBA (Financial 1 August 2013 as a Board Audit Committee and Former CEO and Country Head of Citibank N.A. Sri Lanka. Experience in Management), Non-Executive Director Board Nomination Committee. Investment Banking, Banking Operations, Audit, Relationship Management, FIB, Associate, and appointed as the Corporate Finance, Corporate Banking, and Treasury Management. Chairman ICEA (London). Deputy Chairman on of the Sri Lanka Banks Association (SLBA) in 2003/04. Served as the 10 September 2018. President of the American Chamber of Commerce in Sri Lanka in 2006/07 and was appointed to the Financial Sector Reforms Committee (FSRC). Formerly a member of the National Council of Economic Development (NCED) and a Board Member of the United States–Sri Lanka Fulbright Commission. Joined LOLC in the year 2007 as the Group Managing Director/ CEO and heads the business and operating functions of LOLC Group. He is a member of the main Board of the LOLC Group. 3. Ms M Coralie Pietersz – Independent Director/Senior Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience BSc (Hons) 23 September 2013 as Board Audit Committee (Chairperson), She has over 25 years experience at senior levels in corporate finance, Physics an Independent Director Board Integrated Risk Management accounting and auditing in several industries in both private and public (University and was designated as Committee, Board Human Resources sectors including several years of experience in the banking sector. of Sussex), the Senior Director with and Remuneration Committee Currently, she is the Finance Director of Finlays Colombo Ltd., Hapugastenna MBA (Heriot- effect from 9 May 2016. (Chairperson), Board Governance Plantations PLC and Udapussellawa Plantations PLC. Prior to joining Watt University, and Compliance Committee, Related the Finlays Group, Ms Pietersz was the Group Chief Financial Officer of Edinburgh), ACA Party Transactions Review Committee, Richard Peiris & Co PLC. (ICAEW), FCA and Board Nomination Committee (ICASL). (Chairperson). Ms Pietersz is a member of the Council of The Institute of Chartered Accountants of Sri Lanka and has served on many committees of the Institute. 7 10 6 5 4 3

78 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Board of Directors 4. Mr. Kapila P Ariyaratne – Director/Chief Executive Officer Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience BSc (Honours – 16 February 2015 Board Credit Committee, Board Having joined the Bank in March 2011 as the General Manager/Chief Executive First Class), as an Executive Sustainability Committee, Board Officer, he was appointed to the Board as an Executive Director on 16 February University of Director Marketing and Product Development 2015. He has over 30 years experience having worked for several local and Colombo. Committee, Board Integrated Risk international banks acquiring an in depth knowledge of all aspects of banking Management Committee, Board both in a local as well as in an international context. He is a member of the Strategic Plan Committee, and Board present Governing Board of the Institute of Bankers of Sri Lanka. Information Technology Committee. Mr Ariyaratne is also a Trustee of the Seylan Bank Employees’ Gratuity Trust Fund and Seylan Bank Employees’ Provident Fund. 5. Mr P L S Kumar Perera – Independent Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience BSc (Special) 23 September 2013 Board Audit Committee, Board Over 22 years of executive and managerial experience at the Central Bank of (Mathematics), as an Independent Governance and Compliance Sri Lanka with extensive training and exposure in capital markets, portfolio University of Director. Committee (Chairman), Board management, and new financial instruments locally and overseas. Held the Colombo, MSc Nomination Committee, Related positions of Additional Controller of Exchange at the time of his retirement in Statistics, Party Transactions Review Committee from the Central Bank of Sri Lanka and also of Deputy Director, Marketing of University of (Chairman), and Board Integrated Risk the Agricultural Development Authority prior to his posting at the Central Bank Ibadan, MA Management Committee. of Sri Lanka. Has served the Task Force appointed by the Central Bank of (Economics and Sri Lanka on Reforms to Exchange Control and represented the Central Bank Econometrics), of Sri Lanka at Asia Pacific Group 3rd Annual Meeting on Money Laundering University of held in Australia and at the Indo-Sri Lanka Director-General Level Meeting on Manchester. Anti-Smuggling held in India in 2003. Serves as a Consultant in reputed private sector organisations. 6. Mr S Viran Corea – Non-Executive Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience Bachelor-of-Laws 14 May 2015 as a Board Credit Committee, Board Counsel and Legal Consultant with over 22 years experience at the Bar. Governance and Compliance (LL.B) and Non-Executive Director. Committee, Board Sustainability His experience in private practice has included the fields of constitutional Committee, Related Party Transactions and administrative law, human rights law, commercial law, industrial law, Master-of-Laws Review Committee, and Board arbitration, contract law, and land law. He has been involved as counsel in Human Resources and Remuneration a number of landmark cases of national and public importance reported in (LL.M) (University Committee. the Sri Lanka Law Reports. He has served as a State Counsel at the Attorney General’s Department of Sri Lanka for several years and has represented in of Colombo), court and advised Government Departments and state institutions in several important matters. At present, he is a legal advisor to many organisations Attorney-at-Law. and companies. In 2012, he was picked as an Asia 21 young leader by the Asia Society. 7. Mr Anushka S Wijesinha – Independent Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience MA Economics 1 December 2016 Board Credit Committee (Chairman), He is an economist with expertise in trade, investment and as an Independent Related Party Transactions Review and competitiveness with experience across many sectors. He is currently Development Director. Committee, Board Strategic Plan consultant to international agencies (Deloitte, UNDP and ITC) in Sri Lanka, [University of Committee (Chairman), Board Myanmar and Maldives. He is widely published in national and international Leeds Business Marketing and Product Development academic publications, focusing on innovation, private sector development, School, UK], Committee, Board Nomination and international economics. Formerly he was Advisor to the Ministry of BSc (Hons) Committee, and Board Information Development Strategies and International Trade, was the Chief Economist and Economics Technology Committee. Head of the Economic Intelligence Unit of the Ceylon Chamber of Commerce, [University College Research Economist and Unit Head at Institute of Policy Studies of Sri Lanka, London, UK]. Research Officer to the Presidential Commission on Taxation and Assistant Director of Economic Affairs at the Government Peace Secretariat. He has been a Consultant to the World Bank, ADB, GIZ and UNESCAP. He is an Asia Development Fellow of the Korea Development Institute and member of the World Economic Forum’s “Global Future Council on Innovation Ecosystems”. Mr Wijesinha serves on the Monetary Policy Consultative Committee of the Central Bank of Sri Lanka.

Seylan Bank PLC Annual Report 2019 79 Sustainable Stewardship Board of Directors 8. Mrs Sandya K Salgado – Independent Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience MBA 1 December 2016 Board Human Resources and A specialist in Strategic Communications and Sustainable Business (International) as an Independent Remuneration Committee, Management with over three decades of experience, including in the financial Edith Cowan Director. Board Sustainability Committee and banking sectors. She was also trained at Johns Hopkins University in University, Perth, (Chairperson), Board Marketing and Baltimore USA, in Strategic Communications and was the CEO of Ogilvy Action Australia BA Product Development Committee for nearly twenty years. (English, French, (Chairperson), and Board Strategic Linguistics) Plan Committee. Mrs Salgado was awarded the title “Marketer of the Year” in 2001 and University of “Zonta Woman of Achievement” in 2006 and most recently was awarded Kelaniya, Woman of Inspiration by Women in Management and IFC. She was the Sri Lanka, Senior Communications Specialist at the World Bank, managing the image MCIM-UK. and reputation of the World Bank and the World Bank funded projects in Sri Lanka and Maldives until 2015. Mrs Salgado is the Managing Partner of her consulting company Good Karma, promoting sustainable business management. She serves as an honorary member of the Board of Management of the 1990 Suwaseriya Ambulance Service. 9. Mr D M D Krishan Thilakaratne – Non-Executive Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience AIB (Sri Lanka). 1 October 2018 Board Credit Committee, Board The Director/CEO of Commercial Leasing and Finance PLC, is a Member of the as a Non-Executive Sustainability Committee, and Senior Management Team of LOLC PLC. Director. Board Marketing and Product Development Committee and Board Mr Thilakaratne is a Director of Prasac Micro Finance Cambodia and Human Resources and Remuneration Commercial Insurance Brokers (Pvt) Ltd., and Credit Information Bureau of Committee. Sri Lanka (CRIB). He was formerly Chairman of the Finance Houses Association of Sri Lanka. Mr Thilakaratne is an Associate member of the Institute of Bankers of Sri Lanka (AIB) and has also followed a Strategic Leadership Training Programme in Microfinance at the Harvard Business School, USA. He counts over 25 years of experience in management, credit, channel management, marketing, factoring, portfolio management, and Islamic Finance. 10. Mr D R Abeysuriya – Independent Director Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience FCMA, CGMA, 17 October 2018 as Board Audit Committee, Board A Group Director of Candor Group, Director of HNB Assurance PLC, Bio MBA (Monash an Independent Integrated Risk Management Foods (Pvt) Limited, and Straight Sale (Pvt) Ltd. Was responsible for private University, Director. Committee (Chairman), Board equity investments for Eagle Proprietary Investments Limited, a 200 million Australia), CFA. Human Resources and Remuneration Dollar PE Fund. Committee, Board Strategic Plan Committee, and Board Information Formerly, he was the CEO, Candor Group of Companies owned by National Technology Committee. Industries Group (NIG), one of the largest listed companies in Kuwait, the Head of Strategic Business Development of Hayleys PLC, Managing Director of Amba Research (Pvt) Ltd., Managing Director of Fitch Ratings Lanka Ltd., Director of Sri Lanka Insurance Corporation Ltd. and Chairman of its Investment Committee, a Commission Member of the Securities and Exchange Commission of Sri Lanka, a member of Board Risk Oversight Committee of the Central Bank of Sri Lanka, President of several finance and IT associations, the Head of Corporate Finance at JP Morgan, a permanent member of the Financial Sector Reforms Committee (FSRC), a Prime Ministerial Task Force appointment and consultant for the World Bank and the Government of Sri Lanka. Mr Abeysuriya was named as “Lifetime Achievement” award laureate by CFA Institute, USA in 2017 for his outstanding work and dedication to the investment management profession. 11. Mr R D Tissera – Non-Executive Director (Alternate Director to Mr W D K Jayawardena) Qualifications Appointed to the Board Membership on Board Subcommittees Skills and experience MCIM, UK. On 18 April 2018 as Not applicable Having joined the LOLC Group in 1993, he is a Development Finance an Alternate Director to Specialist. Mr Tissera is the founder CEO of LOLC Micro Credit Ltd. (LOMC), Mr W D K Jayawardena. Sri Lanka’s largest micro finance provider. LOMC was amalgamated with LOLC Finance PLC on 29 March 2018 where he continues to serve on the Board. Mr Tissera also serves on the boards of LOLC Cambodia PLC, LOLC Myanmar Microfinance Ltd., Pak Oman Microfinance Bank, Pakistan, and BRAC Lanka Finance PLC. Mr Tissera has obtained his Post Graduate in Marketing from the Chartered Institute of Marketing, UK. He has also undergone strategic leadership training at the Harvard Business School. During his tenure as CEO of LOMC, it became the only microfinance provider in Sri Lanka to receive certification for the Client Protection Principles from the SMART Campaign USA which also became a case study at INSEAD Business School.

80 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Senior Management Team Director/CEO and Deputy General Managers 1. Mr Kapila Ariyaratne 2. Mr Ramesh Jayasekara 3. Mr Chitral De Silva Director/Chief Executive Officer Senior Deputy General Manager Deputy General Manager – Branches Zone I Educational and professional qualifications: Educational and professional qualifications: Educational and professional qualifications: BSc (Honours – First Class) University of Colombo. Associate of The Institute of Chartered Accountants Executive Diploma in Business Administration – of Sri Lanka, Bachelor of Commerce (First Class) University of Colombo. Total experience: – University of Colombo, Associate of Chartered Institute of Marketing United Kingdom, Associate Total experience: 32 years of Institute of Certified Management Accountants. 37 years Total experience: 22 years 5 7 2 1

Seylan Bank PLC Annual Report 2019 81 Sustainable Stewardship Senior Management Team 4. Mr Delvin Pereira 6. Ms Champika Dodanwela 8. Mr Malik Wickramanayake Deputy General Manager – Branches Zone II Chief Financial Officer Deputy General Manager – Operations Educational and professional qualifications: Educational and professional qualifications: Educational and professional qualifications: Master’s in Business Administration – University of Master’s in Business Administration University of BA in Business and Administration Studies – Western Sydney, Certified Management Accountant Colombo, Fellow member of ACCA UK, Associate Lewis & Clark College, Portland, Oregon, USA. – Australia. member of Certified Management Accountants, Fellow member of Institute of Bankers Sri Lanka, Total experience: Total experience: Bsc Applied Accounting Oxford Brooke UK, Bsc Management. University of Sri Jayewardenepura. 25 years 34 years Total experience: 9. Mr Shanaka Perera Deputy General Manager – Treasury 30 years in banking (finance) Educational and professional qualifications: 5. Mr Jayantha Amarasinghe 7. Mr Harsha Wanigatunga Deputy General Manager – Human Resources Chief Information Officer Master’s in Business Administration – PIM – University of Sri Jayawardanepura, FIB – Institute Educational and professional qualifications: Educational and professional qualifications: of Bankers of Sri Lanka, PG. Ex. Diploma in Bank Management – Institute of Bankers Sri Lanka, Master’s in Business Administration – Bachelor of Science – Computer System Design CMA – ICMA, Australia, ACI DC – ACIFMA, Diploma Buckinghamshire New University, Bachelor of Law – University of Houston – Clear Lake, Master of in Treasury and Risk Management – IBSL. (LLB), Attorney-at-Law, Chartered Fellow Member Science – Computer Engineering – University of of CIPM – Sri Lanka, Postgraduate Diploma in Houston – Clear Lake. Total experience: Management – Sri Lanka Institute of Marketing, Postgraduate Diploma in International Relations – Total experience: 29 years Bandaranaike Centre for International Studies – Sri Lanka. 25 years Total experience: 27 years 9 6 84 3

82 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Senior Management Team Assistant General Managers 1. Mr Wasantha Karunaratne 3. Mr Aruna Fernando 5. Mr Nuwan Jayawardane Assistant General Manager – Services Acting Chief Risk Officer Assistant General Manager – IT Infrastructure Educational and professional qualifications: Educational and professional qualifications: Educational and professional qualifications: Diploma in Purchasing and Materials Management. Master’s of Business Administration – PIM, BSC in Computer Engineering – New Jersey Institute University of Sri Jayewardenepura, AIB (Sri Lanka), of Technology, MBA in finance – University of Total experience: 29 years Postgraduate Certificate Course in Modern Colombo, ITIL V3 Foundation, Project Management Commercial Banking – PIM, University of Professional, COBIT® Foundation. 2. Mr Kapila Rathnayaka Sri Jayewardenepura, Special Course Credited Assistant General Manager – by GARP on Bank Risk Management, Euromoney Total experience: 25 years Premises Maintenance Learning Solutions. 6. Mrs Sharon Fonseka Educational and professional qualifications: Total experience: 32 years Assistant General Manager – Corporate Credit Branches BSc – Engineering Honours (Peradeniya), MBA – 4. Mr Varuna Koggalage PIM University of Sri Jayewardenepura, Chartered Head of Audit Educational and professional qualifications: Engineer, Corporate Member of Institution of Engineers (IESL). Educational and professional qualifications: Associate member of the Institute of Bankers of Sri Lanka. Total experience: 18 years Fellow member of the Chartered Accountants – Sri Lanka (ICASL). Total experience: 31 years Total experience: 24 years 2 15 8 1 5 74

Seylan Bank PLC Annual Report 2019 83 Sustainable Stewardship Senior Management Team 7. Ms Nisha Najumudeen 10. Mr Ranil Dissanayake 13. Mr Sampath Fernando Company Secretary Assistant General Manager – Branch Credit Assistant General Manager – Information Technology Educational and professional qualifications: Educational and professional qualifications: Educational and professional qualifications: Associate Member of the Institute of Chartered Associate member of the Institute of Bankers of Secretaries and Administrators (UK), Associate Sri Lanka, Certificate Course in project Finance – Master’s of Business Administration – University Member of the Institute of Chartered Corporate Institute of Bankers of Sri Lanka. of Manipal, Banking Intermediate. Secretaries of Sri Lanka. Total experience: 29 years Total experience: 30 years Total experience: 30 years 11. Ms Dilani Sooriyaarachchi 14. Mr Eugene Seneviratne 8. Mr Eranga Lankatilaka Head of Compliance Assistant General Manager – Retail Banking Assistant General Manager – Recoveries Educational and professional qualifications: Educational and professional qualifications: Educational and professional qualifications: Attorney-at-Law of the Supreme Courts of Master’s of Business Administration- Sikkim Associate member of the Institute of Bankers of Sri Lanka, Fellow member of the International Manipal University, Certificate IV in Business Sri Lanka, Master’s of Business Administration – Compliance Association of UK [FICA], Fellow Frontline Management – TAFE, Certificate in Credit Rajarata University of Sri Lanka. member of the Institute of Bankers of Sri Lanka – College of Banking & Finance, Intermediate [FIB], Post Graduate Diploma in Business Banking Diploma – IBSL. Total experience: 29 years Management granted by the University of Colombo, Post Attorney Diploma in Banking and Insurance Total experience: 28 years 9. Mr Chandana Gurusinghe Law granted by the Advanced Legal Education Assistant General Manager – Special Projects Centre attached to the Sri Lanka Law College, 15. Mr Sanjaya Perera Diploma in Credit Management granted by the Assistant General Manager – Finance Educational and professional qualifications: Institute of Credit Management of Sri Lanka. Educational and professional qualifications: Certificate IV in Business (Frontline Management) Total experience: 22 years – Department of Further Education, Employment Associate Member of The Institute of Chartered Science and Technology – Government of South 12. Mr Sunil Jayawardana Accountants of Sri Lanka, Bachelor of Science Australia. Head of Credit Hubs in Accountancy and Financial Management – University of Sri Jayewardenepura, Associate Total experience: 35 years Educational and professional qualifications: Member of Institute of Certified Management Accountants, Master’s in Business Administration BSc Business Administration (Special) of University University of Sri Jayewardenepura. of Sri Jayewardenepura, Master’s in Business Studies – University of Colombo. Total experience: 17 years Total experience: 32 years 9 14 13 10 12 11 6 3

84 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance A note from the Chairman The Non-Executive Directors continued to bring independent views and opinions on Dear Shareholders, key issues affecting the Bank. This enabled the Board to provide a solid foundation of Good governance depends on effective robust corporate governance to underpin leadership and a healthy corporate the efforts of the key management team. culture, supported by robust systems and processes and a good understanding I wish to confirm that the Board Governance of risk and risk appetite. We wish to inform and Compliance Committee and the you that in Seylan, such good governance Board of Directors reviewed this Corporate practices have empowered and enabled Governance Report and were satisfied our operations. There is clarity on with the disclosures made on the level the scope of authorities, transparency of compliance in respect of the year and compliance. ended 31 December 2019, under the aforementioned Banking Act Directions We also believe that good governance and also on the related governance codes enables timely flow of information to the and principles overall. Board to support it in fulfilling its roles and responsibilities. The fact that our I confirm that to the best of my knowledge, Bank has complied with the Directions of there were no material violations of any the corporate governance principles set of the provisions of the applicable laws out in the Banking Act Direction No. 11 and regulations, the Banking Act and the of 2007 on Corporate Governance (as Directions issued by the Central Bank of amended) and principles of the codes Sri Lanka and also the Codes of Conduct on corporate governance supports these and Ethics of the Bank. claims. These are disclosed mainly in this Corporate Governance Report as Yours sincerely, well as in the Reports of the key Board Committees in this Annual Report. The W M R S Dias rest of the reports in this Annual Report, Chairman/Non-Executive Director including the Financials, Sustainability and Risk Management also demonstrate 21 February 2020 our commitment to governance, how the Colombo Board has carried out its oversight of strategy and how the Management has applied good governance practices. They also reflect how our policies and processes have been applied and developed in a way that remains consistent with our values and strategy, focusing on engagement, operational improvement and rewards and incentive structures. The Board has ensured effective channels of engagement with its workforce, shareholders and stakeholders. Further, the Board continued to enhance, as well as provide necessary challenges to the development and implementation of the strategies, by interacting with the Management, in particular through its Board Strategic Plan Subcommittee at its periodic meetings.

Seylan Bank PLC Annual Report 2019 85 Sustainable Stewardship Corporate Governance Corporate Governance Report Values stimulated by Seylan Bank’s Vision and Mission Value our Value Believe in result Deliver stakeholder Be responsible customers team work orientation expectations corporate citizens The Board’s approach to corporate governance guided by the following core principles as These codes of conduct and ethics cover defined in the Bank’s Corporate Governance Framework can be construed as one of the principles and guidelines to be abided by: key approaches to meet the objectives and values of the Bank’s Vision and Mission. zz to protect the business interests of Ethical Culture Stewardship the Bank; Independence Corporate Accountability zz to maintain the Bank’s reputation; Governance Principles zz to foster compliance with applicable legal and regulatory obligations. The annual declaration to the effect that the Directors are aware and will abide by the Code of Business Conduct and Ethics for Directors was signed by all the Directors during the year. The Code of Conduct and the Code of Ethics for the Bank’s employees are available on the Bank’s intranet for perusal and due adherence by all staff. Oversight of strategy Continuous Corporate governance and oversight of risk improvement disclosures The Bank’s Corporate Governance zz Guidelines of the Securities and This Corporate Governance Report, Framework guided by the above principles Exchange Commission of Sri Lanka discloses the extent to which the Bank ensures effective engagement with its in pursuance of its regulations has applied and practices the governance stakeholders and helps it evolve with (as amended) principles and directions under the changing times. The Bank’s governance Banking Act Direction No. 11 of 2007 related policies, charters, and codes of zz other applicable regulations, directions on Corporate Governance for Licensed conduct and ethics were formulated taking and recommended best practices on Commercial Banks of Sri Lanka (as into consideration the rules, directions, corporate governance. amended) in compliance with Section guidelines, and principles, etc. of the 3 (1) (xvi) of the said Direction. following regulations in addition to its’ Articles of Association of the Bank own Articles of Association, to ensure Compliance with Banking that we make timely disclosures and The Bank is governed by the provisions Act Direction No. 11 of 2007 share accurate information regarding our contained in the Articles of Association on Corporate Governance financials and performance as well as the which has adopted the relevant provisions (as amended) leadership and governance of the Bank. of the Companies Act No. 07 of 2007, the Banking Act No. 30 of 1988 The Bank’s level of compliance with zz Banking Act Direction No. 11 of 2007 (as amended) and its directions as Section 3 (1) (xvi) of the Banking Act on Corporate Governance for Licensed applicable and relevant. Direction No. 11 of 2007 on Corporate Commercial Banks of Sri Lanka (as Governance (as amended) (hereinafter amended) issued by the Monetary Codes of conduct and ethics referred to as the Banking Act Directions or Board of the Central Bank of Sri Lanka CBSL Directions or Banking Act Directions Two separate Board approved codes of on Corporate Governance) is disclosed zz Provisions of the Companies conduct are in place for the Directors and in the Report that follows with references Act No. 07 of 2007 for the employees of the Bank, namely; to the respective Banking Act Directions. The disclosures cover the following zz the Rules of the Colombo Stock – The Code of Business Conduct and eight sub sections. Section 3 (9) of the Exchange (as amended) Ethics for Directors and Directions (Transitional and Other General Provisions) is not applicable to the Bank. – The Code of Conduct as well as the Code of Ethics for the Bank’s zz Section 3 (1) – The Responsibilities employees including the key of the Board management personnel. zz Section 3 (2) – The Composition of the Board

86 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance zz Section 3 (3) – Fitness and 3 (1) (i) (b) and (c) () 3 (1) (i) (e) () Propriety of Directors Approval of the overall business strategy Internal control systems and management zz Section 3 (4) – Management Functions and risk policies and prudent risk information systems – The Board Audit delegated by the Board of Directors management with measurable goals – Committee assists the Board in reviewing The Bank’s ongoing four-year Strategic the adequacy and integrity of the Bank’s zz Section 3 (5) – Chairman and Plan for the period 2017-2020 was internal control systems and management Chief Executive approved by the Board in the beginning information systems. The decisions of the year 2017. The Board Strategic and/or actions taken are submitted zz Section 3 (6) – Board appointed Plan Committee periodically reviewed the for the Board’s information and/or action Committees developments and the progress of the as appropriate. Strategic Plan and provided necessary zz Section 3 (7) – Related Party guidance to the Executive Management. 3 (1) (i) (f) () Transactions Identification of Key Management The Board has vested the responsibility Personnel (KMPs) – Directors and selected zz Section 3 (8) – Disclosures for formulating and implementing prudent members of the senior management are risk management policies in the Board deemed as KMPs of the Bank who may The Regulations, Directions, Integrated Risk Management Committee. be in a position to influence and exercise Determinations, and Circulars issued by This Committee has ensured that the control over business activities, operations, the Monetary Board of the Central Bank Bank’s Risk Management Unit headed audit and risk management. Appointments of Sri Lanka under the Banking Act No. 30 by the Chief Risk Officer or the Acting of KMPs are recommended by the Board of 1988 (as amended) can be perused by Chief Risk Officer identifies principal Nomination Committee and approved accessing the website of the Central Bank risks and with the approval of the Board by the Board. of Sri Lanka www.cbsl.gov.lk. puts in place policies and guidelines for implementation. The Bank’s overall KMPs are deemed as “related parties” Directions/Compliance Status – business strategy and the approved and therefore, necessary steps are taken complied (); not complied budget are aligned with the overall risk to ensure compliance with the relevant (x); partially complied (p) and assessment and risk appetite of the Banking Act Directions on Related Party level of compliance Bank. The Board approved risk policies Transactions, provisions of the Sri Lanka and procedures in place which constitute Accounting Standards (LKAS/SLFRS) 3 (1) Responsibilities of the Board the overall risk management framework and the Rules of the Colombo Stock of the Bank were constantly tested and Exchange. The Bank’s Policy and Process 3 (1) (i) () reviewed by the Risk Management Unit document on Related Party Transactions Ensuring the safety and soundness of and the status reported and reviewed by and Avoidance of Conflicts of Interests the Bank – The Board has taken relevant the Committee. and the Codes of Ethics provide necessary measures to ensure the safety and stability principles, guidelines and processes to be of the Bank during the year under review 3 (1) (i) (d) () followed by KMPs in this regard. including the following: Communication Policy with all stakeholders – The following policies are 3 (1) (i) (g) () 3 (1) (i) (a) () in place: Strategic objectives and corporate Defining of areas of authority and key values – The Bank’s strategic objectives zz Stakeholder Engagement Policy – an responsibilities – The key responsibilities and corporate values as defined in its internal document specifying the lines of Key Management Personnel (KMPs) are Vision and Mission statements have been of authority for communication with defined in their job responsibilities, whilst communicated to the staff. Staff members different stakeholders/institutions in the the Directors derive their responsibilities from different segments of the Bank were ordinary course of its business. from the regulations and directions, also invited to organised forums and mainly, the Banking Act Directions. This sessions to be briefed, to reinforce the zz Customer Charter (customers include is documented in the Board approved importance of achieving the objectives depositors and borrowers) – This Corporate Governance Framework. and further to review the progress against document which is published in all the set targets of the Bank’s strategic three languages on the Bank’s website, 3 (1) (i) (h) () objectives vis-à-vis the Budget for the year. www.seylan.lk outlines the Bank’s policy on dealing with customers, Oversight of the affairs of the Bank by The corporate values of the Bank are set handling customer complaints, contact Key Management Personnel (KMPs) – out in the Code of Conduct and Code information for making complaints to The Management Accounts and Reports of Ethics for employees as well as other the Bank and also to the Financial presented to the Board by the Chief related policies of the Bank which have Ombudsman. Financial Officer on a monthly basis been communicated and made available provides an overall account of the on the Bank’s intranet for the information zz Shareholder Communication Policy – performance of the Bank (overall) and of the employees and also inculcated at Accessible on the Bank’s website, of the business units and support units, training sessions conducted by the Bank. www.seylan.lk. vis-à-vis its set strategic objectives. These The Board members too annually peruse were reviewed, deliberated and discussed and attest their familiarity and pledge to zz Communication Policy – an internal in depth by the Board. Further, reports abide by the Bank’s Code of Business document which provides guiding and proposals from KMPs including those Conduct and Ethics for Directors which has principles for both internal and pursuant to discussions and decisions at set out the Bank’s corporate values. external communication, mainly the corporate management meetings or the dissemination of corporate information related management committee meetings to the media.

Seylan Bank PLC Annual Report 2019 87 Sustainable Stewardship Corporate Governance headed by the CEO are submitted to the “specific” time bound objectives for each 3 (1) (ii) () Board and Board Subcommittees for year within the scope of each of its overall information, review, and/or approval. These responsibilities as a step towards further Appointment of Chairman and Chief processes ensure the Board’s oversight on enhancing their effectiveness in the best Executive Officer – Non-Executive Director, the affairs of the Bank by KMPs. interest of the Bank. Mr W M R S Dias was appointed as the Chairman of the Bank in May 2016 Conversely, decisions of the Board and 3 (1) (i) (j) () whilst Mr K P Ariyaratne was appointed Board Subcommittees were communicated by the Board in March 2011 as its Chief to the KMPs and executive management Succession plan for Key Management Executive Officer (CEO). The functions and (vide relevant minute extracts) which Personnel (KMPs) – This responsibility responsibilities of the Chairman are as enabled the KMPs and the management is vested with the Board Nomination defined in Section 3 (5) of the Banking to understand the Board’s expectations Committee (a Subcommittee of the Board). Act Directions and were stated in the vis-à-vis appropriate follow up actions. During the year, the Committee constantly Corporate Governance Framework of the reviewed and ensured the effectiveness of Bank. These are distinct from the role and 3 (1) (i) (i) () the Succession Plan for Key Management responsibilities of the CEO which is defined Effectiveness of the Board’s own Personnel in place, even during times of in his Job Description approved by the governance practices – The Board has in KMP turnover and changes, consequent Board. Please refer Section 3 (5) of this place a formal process for reviewing its own to resignations, retirements and structural Report for further update. performance and that of its Committees changes in order that the activities annually. Each Director is required to continued without any disruption to 3 (1) (iii) () complete a detailed questionnaire which business. The Committee also ensured that aims to obtain Directors’ feedback on the the right training and development plans Frequency of Board Meetings and effectiveness of the Board’s governance were in place for identified successors. participation of Directors – Twelve practices including, but not limited to, the regular meetings were held monthly. following areas: 3 (1) (i) (k) () Additionally, three special meetings were held at different times during the year to zz structure of the Board and its Regular meetings with Key Management consider important issues with the active Committees; Personnel (KMPs) – The CEO and KMPs participation of Directors. heading different areas of authority were zz board culture and relationships with regularly met at meetings of the Board Quorum – The quorum at Board Meetings stakeholders; Subcommittees as well as at Board is minimum five members or above 50% meetings which provided an opportunity of the number on the Board whichever zz meeting processes; effectiveness of for the Board to discuss the progress and is higher with the presence of majority Board proceedings; the extent to which policies, corporate Non-Executive Directors. The quorum strategies and objectives of the Bank were required in this manner was maintained zz implementation of strategy; internal implemented and achieved. from commencement to the conclusion control processes and risk management; of proceedings of Board Meetings held 3 (1) (i) (l) () during the year. zz evaluation of performance against goals and targets of the CEO and the KMPs; Understanding of the Regulatory Directors actively participated, shared their Environment – The Board members by their views and made valuable contributions zz succession planning; own professional virtues keep abreast of at Board proceedings. Resolutions by the changes in the regulatory environment. circulation were restricted to matters of a zz knowledge and skills update. They were also updated of the changes in routine nature and/or for urgent business the regulatory environment relating to or requirements. A summarised report of The reports were collated and summarised affecting the licensed commercial banks in all such resolutions passed, were ratified by the Company Secretary and general and/or the activities of the Bank, at the immediate regular monthly Board submitted for the review and comments by the CEO and relevant key management meetings that followed such dates of or recommendations of the Board personnel at the Board Subcommittee resolutions. The Directors’ attendance at Governance and Compliance Committee, level and at Board level. The Board Board meetings are disclosed under and thereafter submitted to the Board discusses and/or endorses the steps 3 (1) (vi) below. for an overall assessment of the Board taken to comply with such changes as effectiveness and decisions where appropriate. The Board has ensured that 3 (1) (iv) () appropriate. The self-evaluation reports the Bank maintains an effective dialogue of the Board Subcommittees too were and relationship with the Regulators. Agenda – Since adequate notice of the submitted to the Board for its review Board meetings were issued, Directors and comments. 3 (1) (i) (m) () had the opportunity to include matters and/or proposals relating to business The results of the above annual evaluation Hiring of External Auditors – A Board of the Bank and other relevant matters processes which were deliberated by the approved Policy for hiring and engagement to be considered at Board meetings. Board at its meetings held in the first of external auditors is in place. The Board Further, at the Board meetings too, the quarter of 2019, reflected that the Board Audit Committee is vested with the Directors proposed and collectively agreed and the Board Subcommittees have responsibility of exercising due diligence on matters to be included in the Agenda continued to be effective and the Directors and oversight in making necessary of future Board meetings and/or Board have made valuable contributions recommendations for hiring of the External Subcommittee meetings. Papers and towards the Board’s responsibilities. Auditors. The Committee has ensured information was provided by management The evaluations also yielded valid that the Audit Engagement Partner was to comply with any such requests of the recommendations which emphasised changed every five years. Board prior to Board meetings. the importance of the Board and Board Subcommittees to decide and set

88 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance 3 (1) (v) () 3 (1) (vi) () Notice of Meeting – Notices for the Attendance – At every Board meeting, the regular monthly meetings of the Board of Company Secretary apprised the Board Directors were emailed by the Company members’ record of attendance at Board Secretary to the Directors as well as to the meetings held in the period of twelve management at least three weeks prior months immediately preceding the regular to the meeting whilst the agenda and the Board meetings. During the year, each connected papers/reports were circulated Director has attended more than two-thirds to the Directors seven days prior to such of the meetings he/she was eligible to regular monthly meetings. Urgent Board attend and further, no Director was absent papers were included on an exceptional from three consecutive meetings. Please basis with the consent of the Board refer table below: members present. Director Status* Meetings eligible to attend Meetings attended As a percentage (%) Mr W M R S Dias Non-IND NED/Chairman 13 13 100.00 13 10** 76.92 Mr W D K Jayawardena Non-IND NED/Deputy Chairman 13 13 13 13 100.00 Ms M C Pietersz IND NED/Senior Director 13 12 100.00 13 10 Mr K P Ariyaratne EXD/Chief Executive Officer 13 10 92.31 13 12 76.92 Mr P L S K Perera IND NED 13 12 76.92 13 12 92.31 Mr S V Corea Non-IND NED 92.31 92.31 Mr A S Wijesinha IND NED 90.00 Ms S K Salgado IND NED Mr D M D K Thilakaratne Non-IND NED Mr D R Abeysuriya IND NED Overall average attendance at Board Meetings *NED – Non-Executive; IND – Independent; EXD – Executive ** – Included five meetings attended by the Alternate Director, Mr R D Tissera Note: 2 Special meetings convened on short notice and held, were not counted for attendance. 3 (1) (vii) () 3 (1) (viii) () 3 (1) (xi) () Company Secretary – Ms N N Najumudeen, Access to the advice and services of Independent professional advice – who is a qualified Chartered Secretary, is the Company Secretary – Advice and Directors are able to seek independent the Bank’s Company Secretary appointed services sought by the Board members professional advice at the expense of the by the Board and is not an employee of from time to time in respect of Board Bank in furtherance of their duties and any other organisation or institution in responsibilities, procedures and applicable contribution in the interest of the Bank. conformation with Section 43 of the rules and regulations that are required A Board approved procedure is in place Banking Act No. 30 of 1988 (as to be followed, were duly offered by the for this purpose. amended). The Board approved Job Company Secretary. Description of the Company Secretary 3 (1) (xii) () adequately covers the responsibilities of a 3 (1) (ix) and (x) () Company/Board Secretary set out in the Avoidance of conflicts of interest – If a relevant regulations and codes. Minutes of Board Meetings – Minutes Director has a conflict of interest in a of Board meetings were recorded by the matter to be considered by the Board or The Company Secretary reports to the Company Secretary in sufficient detail by a Board subcommittee, which has been Board and to the Board Subcommittees to enable a proper assessment to be determined to be material, the Company and guides the members on matters made of the extent of deliberations and Secretary and/or the Chairman or the relevant to the proper functioning of the decisions taken at the meetings. Minutes Director/s concerned draw the attention Board and the Board Subcommittees. of Board meetings were prepared by the of the Board to such interest (Directors’ The Company Secretary also oversees the Company Secretary and circulated to interest in contract or related party administration and day-to-day operations the Directors upon being reviewed by the interest), prior to such proposal or matter of the Company Secretariat including Chairman, so that they may peruse same being discussed and decided upon at the registrars functions, shareholder and confirm or record any discrepancy for the meeting. Directors leave the meeting communications and communications rectification or amendment at the following room to abstain from participating in with regulatory authorities, mainly the Board meeting. The Minute Books were such deliberations and from voting on any Colombo Stock Exchange, the Registrar maintained by the Company Secretary such resolution. Such Directors were not of Companies and the Central Bank of and were available for inspection by any counted for the quorum for approving such Sri Lanka. Director on reasonable notice. agenda item at the Board meeting.

Seylan Bank PLC Annual Report 2019 89 Sustainable Stewardship Corporate Governance 3 (1) (xiii) () 3 (2) The Board’s Composition 3 (2) (ii) () Schedule of Matters Reserved for Board’s 3 (2) (i) () Period of Service of Directors other than Decision – There is a formal schedule of a Director who holds the position of matters that are included in the Agenda Board Composition – The Bank is in CEO – Other than Independent Director, of regular Board meetings held monthly compliance with this section of the Mr S P S Ranatunga who retired as at which also includes matters which Banking Act Directions, i.e., that the 11 January 2019 after serving the Board require the approval of the Board where composition of the Board be not for nine years, the period served by the it is not within the delegated authority less than 7 and not more than 13. other Non-Executive Directors on the Board of the management and/or the Board The Board comprised 10 members during the year, did not exceed nine years Subcommittees. as at 31 December 2019, as described as noted in the following table: in the table below: 3 (1) (xiv) () Director Status* Date of appointment Period served as at The Bank’s ability/inability to meet its 31 December 2019 obligations on payments – The Board Mr W M R S Dias Non-IND NED/Chairman 29 May 2015 4 years, 7 months has adopted a Contingency Funding Plan Mr W D K Non-IND NED/Deputy (CFP) which was reviewed and adopted Jayawardena Chairman 1 August 2013 6 years, 5 months during the year. The CFP addresses the Ms M C Pietersz IND NED/Senior Director 23 September 2013 6 years, 3 months procedures to be followed by the Bank in Mr K P Ariyaratne EXD/ keeping the Director of Bank Supervision Chief Executive Officer 16 February 2015 4 years, 10 months of the Central Bank of Sri Lanka informed Mr P L S K Perera IND NED 23 September 2013 6 years, 3 months in a liquidity crisis situation, i.e., if it Mr S V Corea Non-IND NED 14 May 2015 4 years, 7 months considers that it is, or is unlikely to be Mr A S Wijesinha IND NED 1 December 2016 3 years, 1 month able to meet its obligations or is about to Ms S K Salgado IND NED 1 December 2016 3 years, 1 month suspend payments due to depositors and Mr D M D K other creditors. The Bank however, did not Thilakaratne Non-IND NED 1 October 2018 1 year, 3 months face a situation of being unable to meet Mr D R Abeysuriya IND NED 17 October 2018 1 year, 2 months its obligations on payments during the year. *NED – Non-Executive; IND – Independent Non-Executive; EXD – Executive 3 (1) (xv) () Period of service of % minimum requirement of independent Non-Executive Directors Non-Executive Directors to be three or Capitalisation of the Bank – During the as at 31 December 2019 one-third of the total number of Directors year, the Board ensured that the Bank on the Board, whichever is higher (in the complied with the Capital Adequacy 33 22 case of the Bank’s Board should be three requirements as required by the Monetary or 10*1/3rd = 3.33, i.e. 4). Board. The Capital Augmentation Plan prepared based on BASEL III, taking 45 Determination of Independence – into consideration the projected growth The Board determined the independent patterns, SLFRS 9 impact on the 0+ to 3 years 3+ to 6 years 6+ to 9 years and non-independent status of the profitability, capital issues (debt and rights Non-Executive Directors based on the issues), dividend payout, etc., was tabled declarations submitted by those Directors to the Board and approved during the at the beginning of the year 2019, in year. The Bank’s total capital ratio was in accordance with the criteria defined in compliance with the prudential limit as at the Banking Act Direction No. 3 (2) (iv) 31 December 2019 confirming that it was and also in terms of Section 7.10.4 of the adequately capitalised. Rules of the Colombo Stock Exchange. 3 (1) (xvi) () 3 (2) (iii) () Status of Directors % Annual Corporate Governance Report – Appointment of Executive Directors – 10 This Corporate Governance Report The number of Executive Directors was published in the Annual Report serves to less than one-third of the number of 40 meet the requirement of this provision in Directors on the Board of the Bank. compliance with Direction 3 of the Banking Director/Chief Executive Officer, Mr K P Act Directions on Corporate Governance. Ariyaratne was the only Executive Director on the Board during the year. 3 (1) (xvii) () 3 (2) (iv) () 50 NED IND Executive Scheme of self-assessment – Each member of the Board submitted his/her Independent Directors – There were five NED Non-IND own self-assessment report to the Board, Independent Non-Executive Directors reporting on the extent of their respective throughout the year 2019, thus complying contributions to the Board and to the with this direction, which states the Board Subcommittees they were attached to. The reports were shared at the Board meeting and filed for record by the Company Secretary.

90 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance 3 (2) (v) () with the required quorum and the presence 3 (2) (xii) () of a majority of the Non-Executive Directors. Alternate Directors – Mr R D Tissera Appointments in any other Bank – functioned as the Alternate Director to 3 (2) (viii) () No Director and no employee of the Bank Non-Independent Non-Executive Director, has been appointed, elected or nominated Mr W D K Jayawardena. He attended the Identification of status of Directors in as a Director of another Bank. This is five meetings of the Board during the year corporate communications – The status a requirement stipulated in the Policy on behalf of Mr W D K Jayawardena. of directorships has been expressly Governing Directors’ Appointment, in the Mr R D Tissera’s status of Alternate identified in all corporate communications letters of appointment of employees and Directorship was deemed including the Annual Reports. Designations related policies of the Bank. Non-Independent Non-Executive. of Directors who were designated with identified positions such as, Chairman, 3 (3) Criteria to assess the fitness 3 (2) (vi) () Deputy Chairman, Senior Director, and and propriety of Directors Chief Executive Officer have also been Profile of the Non-Executive Directors – duly stated in such communications. All appointments to the Board were made The Board believes in the approach after obtaining approval of the Director, to diversity on the Board, since a truly 3 (2) (ix) () Bank Supervision, Central Bank of diverse board will include and make good Sri Lanka in terms of Section 42 use of differences in the skills, industry Procedure for Appointment of Directors – of the Banking Act No. 30 of 1988 experience, background, and other Board approved Policy Governing Directors’ (as amended). Declarations and qualities of members of the Board. Appointment is in place which acts as a affidavits of the continuing Directors These differences were taken into account guideline to the Board when appointments were also forwarded to the Director, Bank in determining the optimum composition to the Board are considered. The Board Supervision annually, prior to the Annual of the Board and such requirements Nomination Committee is vested with the General Meeting for perusal and approval. are set out in its Policy for Appointment responsibility of identifying new Directors of Directors. and/or considering the suitability of The declarations submitted to and Directors nominated to the Board. accepted by the Director, Bank Supervision The Non-Executive Directors on the confirm that the Directors meet the criteria Board included personnel with extensive 3 (2) (x) () of fitness and propriety as per Section 42 experience, skills and proven track of the Banking Act No. 30 of 1988 records, in the field of banking, finance, Election of Directors appointed to (as amended) and its Directions. management, accounting, auditing, fill casual vacancy on the Board – In law, economics, research, marketing, terms of Article 89 of the Articles of 3 (3) (i) () strategic communications, etc. Their Association, a Director who is appointed expertise brought in independent after an Annual General Meeting (AGM) Retirement Age of Directors – The related judgement on issues relating to strategy, of the Bank is subject to election by the Section of the Banking Act Direction performance and resources. The profiles shareholders at the AGM that follows stipulates that a person who is over 70 of all Directors of the Board are provided his or her appointment. Proposals in years of age shall not serve as a Director. in this Annual Report. terms of the said Articles for the election No Directors on the Board exceeded the of Non-Executive Director, Mr D M D K age of 70 during the year. Thilakaratne and Mr D R Abeysuriya who Areas of expertise of % were appointed to the Board in October Age Diversity as at % the Board Members 2018 were included in the Agenda for the 31 December 2019 AGM held on 28 March 2019 and they were duly elected by the shareholders. 10 No Directors were appointed during 9 32 2019 to fill casual vacancies. 30 5 20 3 (2) (xi) () 9 Resignation/Removal/Cessation of 4 Directorship – Upon the Board accepting and/or recording the resignation or 18 retirement of a Director, the regulatory 40 23 authorities (namely the Central Bank of Sri Lanka and the Registrar of Companies) are informed, as are the 30+ years 40+ years 50+ years shareholders through announcements Banking and Management Strategic made to the Colombo Stock Exchange Finance Development by the Company Secretary. Such information includes statements that 60+ years Marketing and Audit and Law may be relevant to be brought to the Strategic Accounting information of the regulatory authority Communication and/or to the shareholders. The retirement 3 (3) (ii) (Amended by Direction of Independent Director, Mr S P S No. 3 of 2013) () Economics, Research and Advisory Ranatunga as at 11 January 2019 was communicated accordingly. Directorships in other companies/ 3 (2) (vii) () institutions – No Director held directorships in more than 20 companies/entities/ Non-Executive Directors composition at institutions inclusive of the subsidiary of the Board Meetings – Meetings of the Board Bank. Please refer Annexure to the Report held during the year were duly constituted of the Board of Directors for details on other directorships held by the Board members.

Seylan Bank PLC Annual Report 2019 91 Sustainable Stewardship Corporate Governance 3 (4) Management functions the Board Subcommittees within the together with the recommendations of the delegated by the Board of Directors respective scopes of the Board approved Subcommittees overlooking the subject Terms of Reference, and to the CEO and matter (where applicable) are considered 3 (4) (i)-(iii) () other Key Management Personnel (KMPs) and approved/decided by the Board. who work within the Board approved The Board ensures that the delegation Board delegation arrangements in place – delegated authority limits and the scope processes do not hinder or reduce the The Board is empowered by the Articles of of their approved job descriptions. Board’s overall powers to effectively Association to delegate any of its powers discharge its responsibilities and thereby to the Board Subcommittees consisting of New delegation processes or revisions reserves certain powers for itself. such member or members as the Board to the existing delegation processes, as thinks fit and to the Chief Executive Officer proposed and recommended by the CEO Some of the matters reserved for the as appropriate. and the relevant KMPs, taking into account Board include the following: business needs and structural changes, The Board has delegated matters pertaining to the affairs of the Bank to Governance Overall strategy, and remuneration business plans and budgets matters Approval of major Any changes to transactions capital, constitution or corporate structure Board/KMP Approval of appointments, accounts, financial succession planning reporting, internal and terms of controls and reference key policies The following governance structure diagram depicts the appointment/delegation of authority/reporting lines of the delegation process within the Bank. External Assurance Shareholders Board Subcommittees External Regulations Board of Directors Regulatory Framework External Chief Executive Officer Company Secretary Head of Auditor Internal Audit/ Head of Risk, Corporate Management Appointment Lines Head of Compliance Management Committees Internal Assurance Internal Regulations/Frameworks, Policies, Procedures Reporting Lines Administrative Reporting Lines Delegation of Authority Lines * Head of Internal Audit reports directly to the Board Audit Committee. Head of Risk and Head of Compliance report directly to the Board Integrated Risk Management Committee and they are members of the Corporate Management.

92 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance 3 (5) Chairman and the 2019 other than in respect of e. Chairman, Mr W M R S Dias holds Chief Executive Officer the following: a Directorship in a Non-Executive capacity and did not engage in direct 3 (5) (i) () zz Directors, Mr W D K Jayawardena supervision of the Key Management and Mr D M D K Thilakaratne were Personnel or any other executive duties. Chairman and Chief Executive Officer – nominated to the Board by the The Chairman’s role is to provide Bank’s material shareholders, f. Ensures that effective communication leadership to the Board, ensure that the Brown & Company PLC and LOLC with shareholders is maintained and Board discusses and collectively decides Investments Ltd. that the views of shareholders are on key issues and that it discharges its communicated to the Board. The responsibilities effectively. The CEO is zz Directors, Mr W M R S Dias and general meetings of the Bank are responsible for the overall management Mr S V Corea were nominated to forums utilised by the Board as well of the operations and business of the the Board by the Bank’s material as the Shareholders of the Bank Bank. The division of responsibilities is shareholder, Sri Lanka Insurance to have an effective dialogue with pronounced in the Corporate Governance Corporation Ltd. one another. The Bank publishes its Framework of the Bank. corporate announcements, Financials 3 (5) (iv)-(x) () Statements, related documents of the 3 (5) (ii) () issued public listed debentures and Chairman’s Role – The Chairman’s role the daily trading prices of its shares Independent status of the Chairman – can be described as follows: on its corporate website, www.seylan. Chairman, Mr W M R S Dias is a lk. The Bank has also published its Non-Executive Director. He was determined a. Provides leadership to the Board and Shareholder Communication Policy as not “independent” since he was ensures that the Board effectively on its corporate website for the nominated to the Board by the Sri Lanka discharges its responsibilities and that information of the Shareholders. Insurance Corporation Ltd., material all key issues are discussed by the shareholder of the Bank. Therefore, Board in a timely manner. 3 (5) (xi) () Independent Non-Executive Director, Ms M C Pietersz was appointed as b. Ensures that the agenda for the Board Chief Executive Officer – Mr K P Ariyaratne, the Senior Director by the Board with Meetings, preparation of which is Director/CEO of the Bank heads the Senior effect from the date of the Chairman’s delegated to the Company Secretary, Management Team of the Bank and reports appointment on 9 May 2016, with a Board takes into account any matters to the Board of Directors. His main approved Terms of Reference. proposed by the other directors for function and responsibility is the overall inclusion in the agenda and that Board management of the operations and 3 (5) (iii) () papers covering adequate information business of the Bank in line with its is circulated to the Directors at least strategic objectives as delegated by Disclosure of the identity and seven days prior to the Meeting. the Board. relationship of the Chairman and the CEO and other Board Members – The c. Ensures that Directors, especially new 3 (6) Board Appointed Committees declarations submitted by the Directors Directors on the Board are duly briefed upon appointment and annually by on issues arising at Board meetings. 3 (6) (i) () the continuing Directors as well as the declaration submitted by the CEO d. Encourages all Directors to make an Subcommittees appointed by the Board – confirm that no relationship of any nature active contribution and ensures that The Board has established in total eleven (including financial, business, family or the deliberations and decisions of the Board Subcommittees; four of which other material/relevant relationships) Board are in the best interest of the were as required in these directions; existed between the Chairman and the Bank. Non-Executive Directors chair one as required by the Rules of the CEO (who is also a member of the Board) Board Subcommittees and/or are Colombo Stock Exchange and further six and also did not exist amongst the members of the Board Subcommittees Subcommittees for purposes referred in members on the Board, during the year and thereby play an active role in their scope and objectives. executing the responsibilities delegated by the Board to the Committees in the best interest of the Bank. Committees established as per the Committees established as per the Rules of Additional Committees established Banking Act Directions the Colombo Stock Exchange and as per the by the Board Code of Best Practice on Corporate Governance zz Board Audit Committee 2017, issued by the CA Sri Lanka zz Board Credit Committee zz Board Integrated Risk Management zz Board Strategic Plan Committee zz Board Audit Committee zz Board Governance and Committee zz Board Nomination Committee zz Board Nomination Committee Compliance Committee zz Board Human Resources and zz Board Marketing and Product zz Board Human Resources and Remuneration Committee Remuneration Committee Development Committee zz Board Sustainability Committee zz Related Party Transactions Review zz Board Information Technology Committee Committee

Seylan Bank PLC Annual Report 2019 93 These Board appointed Subcommittees Committees during the year and carried Sustainable Stewardship Corporate Governance functioned within Board approved Terms of out the related responsibilities. Reports Reference and reported to the Board. All and papers that required the Board’s Please refer tables below for the Committees were chaired by Independent attention and/or decisions were followed scope and objectives, membership of Non-executive Directors. The Company up and circulated to the Board along Directors and attendance of Directors Secretary was the Secretary to all these with copies of confirmed minutes of the at the meetings during the year, of all Committee meetings. the 11 Committees. Reports of the 5 mandatory Committees required as per the Banking Act Directions and the Rules of the Colombo Stock Exchange (listed above) have also been individually published in this Annual Report. Scope and Objectives of Present Composition Membership of Directors Highlights of Activities the Committee during the year Board Audit Committee Independent 3 Ms M C Pietersz zz Adoption of a new Procedure Non-Executive Directors (IND NED/Senior Director) and Guidelines on Estimating Overview of responsibilities Non-Independent 1 – Chairperson; Impairment Allowance under for the financial reporting Non-Executive Directors Nil SLFRS 9. process, the system of Executive Directors Independent Mr W D K Jayawardena internal control, the audit Chairperson Non-Executive (Non-IND NED/Deputy zz Review and adoption of process, and the company’s Director Chairman); the Policy on Non-audit process for monitoring Quorum 2 members Services by External Auditors compliance with Mr P L S K Perera (as amended). laws and regulations (IND NED); and the Code of Conduct. zz A new Audit Engagement Mr D R Abeysuriya Partner was assigned by The Head of Internal Audit reports directly (IND NED). the External Auditors with to the Committee. effect from the Financial year 2019, after the completion of tenure of five years of the previous Audit Engagement Partner. Please also refer Report of the Committee on page 104. Board Integrated Risk Independent 3 Mr D R Abeysuriya zz Recommendation of the Management Committee Non-Executive Directors Non-Independent 1 (IND NED) Chairman; acquisition of a new Assess all risks facing the Non-Executive Directors Bank and its reputation Executive Directors 1 Mr W M R S Dias Anti-Money Laundering namely, credit, market, Management Chief Executive (Non-IND NED/Chairman); System for the Bank. liquidity, operational and strategic risks on a regular Chairman Officer and Ms M C Pietersz zz Recommendation of the basis through appropriate Chief Risk risk indicators and Quorum adoption of the reviewed management information Officer (IND NED/Senior Director); risk related and compliance- and also assess the risks Independent faced by its subsidiary. Non-Executive Mr P L S K Perera related policies and the (IND NED); comprehensive review of the Director Integrated Risk Management 2 members Mr K P Ariyaratne Framework. (Director/CEO); zz Review of the progress on Mr Aruna Fernando implementation of the new (Actg. Chief Risk Officer). goAML reporting system The Head of Risk (Actg. Chief Risk Officer) required by the Financial and the Head of Compliance reports directly to the Committee. Investigation Unit of the Central Bank. Please also refer Report of the Committee on page 107.

94 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance Scope and Objectives of Present Composition Membership of Directors Highlights of Activities the Committee during the year Board Human Resources Independent 3 Ms M C Pietersz zz Recommendation for the and Remuneration Committee Non-Executive Directors (IND NED/Senior Director) adoption of the Human Non-Independent 1 – Chairperson; Resources related Policies. To assist and make Non-Executive Directors recommendations to Executive Directors Nil Ms S K Salgado zz Recommendation of a the Board of Directors in Chairman Independent (IND NED); reviewed Performance Bonus exercising its oversight Non-Executive Scheme for the corporate/ role and responsibilities Quorum Mr S V Corea executive management on matters related to Director (Non-IND NED); replacing the existing human resource strategies, 2 members scheme. policies and determination Mr D R Abeysuriya of compensation, benefits Director/CEO and Head of Human (IND NED); zz Introduction of Performance and remuneration for the Resources were present on invitation Bonus Schemes for the Directors, the Chief Executive except when matters relating to them (Mr D M D K Thilakaratne Strategic Business Units, Officer (CEO) and Key were being discussed. Non-IND NED, was Credit Hubs and Area Offices. Management Personnel appointed with effect from (KMPs) of the Bank. 1 January 2020). zz Reviewed and guided on the Training and Development programmes in place for the corporate/executive management. Please also refer Report of the Committee on page 105. Board Nomination Independent 3 Ms M C Pietersz zz Training and development Committee Non-Executive Directors (IND NED/Senior Director) programmes based on the Non-independent 2 – Chairperson; succession planning for To assist the Board in Non-Executive Directors Key Management Personnel fulfilling the role and Executive Directors Nil Mr W M R S Dias (KMPs). responsibilities involving Chairman Independent (Non-IND NED/Chairman); appointment of Directors Non-Executive zz Succession and and Key Management Quorum Mr W D K Jayawardena Organisational Restructure Personnel of the Bank. Director (Non-IND NED/Deputy and Changes to the KMP 2 members Chairman); functional responsibilities. Director/CEO and Head of Human Mr P L S K Perera zz Recommendations for the Resources were present on invitation (IND NED); election and re-election of except when matters relating to them Directors. were being discussed. Mr A S Wijesinha (IND NED). zz Recommendations for appointments and promotions to KMP positions. Please also refer Report of the Committee on page 106. Related Party Transactions Independent 3 Mr P L S K Perera zz Revision of the Related Party Review Committee Non-Executive Directors (IND NED); – Chairman; Transactions and Avoidance Non-independent 1 of Conflicts of Interest Policy To review Related Party Non-Executive Directors Ms M C Pietersz and Process. Transactions (RPTs) as Executive Directors Nil (IND NED/Senior Director; required by the Listing Rules Chairman Independent zz Review of recurrent and of Colombo Stock Exchange Non-Executive Mr S V Corea non-recurrent related party (CSE) (and any amendment Quorum (Non-IND NED); transactions. from time to time) and the Director Code of Best Practice on 2 members Mr A S Wijesinha zz Terms of Reference of the Related Party Transactions (IND NED). Committee was reviewed and issued by the Securities and adopted. Exchange Commission of Sri Lanka (SEC). Director/CEO and Head of Compliance Please also refer Report of the were present on invitation. Committee on page 108.

Seylan Bank PLC Annual Report 2019 95 Sustainable Stewardship Corporate Governance Scope and Objectives of Present Composition Membership of Directors Highlights of Activities the Committee during the year Independent 1 Mr A S Wijesinha Board Credit Committee Non-Executive Directors (IND NED) – Chairman; Recommended to the Board Non-Independent 2 the revisions to: To improve the business and Non-Executive Directors Mr S V Corea zz Delegated Authority Limits soundness of the Bank and Executive Directors 1 (Non-IND NED); to promote and reinforce Chairman Independent for Lending Officers. a robust and pervasive Non-Executive Mr D M D K Thilakaratne zz Policy on Delegated credit risk acceptance and Quorum (Non-IND NED); management culture by: Director Lending Authority. 2 members Mr K P Ariyaratne zz Single Borrower Limits overall zz Reviewing and where (Director/CEO). zz Single Borrower Limits – appropriate approving credit facilities or Head of Treasury and Head of Risk were Related parties. recommending them to opted to the Committee. Heads of the zz Lending Guidelines. the Board for approval; business units attended the meetings on invitation. Reviewed: zz Guiding management to zz Overall credit portfolio improve credit policies, procedures and lending of the branches. guidelines and their zz Credit risk profile of the Bank. implementation; zz Independent credit zz Advising on processes for risk reviews. recoveries, empowerment zz Exposure to different sectors. and accountability for zz NPA recoveries. credit decision making. Board Marketing and Independent 2 Ms S K Salgado Reviewed: Product Development Non-Executive Directors (IND NED) – Chairperson; Committee Non-Independent 2 zz Return on Investments and Non-Executive Directors Mr W M R S Dias Product Profitability. To review the overall Executive Directors 1 (Non-IND NED/Chairman); marketing plans of the Bank Chairman Independent zz Marketing initiatives and to ensure that the plans aim Non-Executive Mr A S Wijesinha strategies. at optimising value creation Quorum (IND NED); for the Bank and support the Director zz New brand propositions. Strategic goals. To assess 2 members Mr K P Ariyaratne all deposit, lending and (Director/CEO); zz Marketing Plan 2020. investment products of the Bank on a regular basis and Head of Marketing and Chief Financial Mr D M D K Thilakaratne satisfy itself that the Bank is Officer attended the meetings on invitation. (Non-IND NED). actively pursuing new product opportunities and developing viable products with the aim of achieving business growth. Board Sustainability Independent 1 Ms S K Salgado Reviewed: Committee Non-Executive Directors (IND NED) – Chairperson; Non-Independent 2 zz Progress of the To make decisions on Non-Executive Directors Mr K P Ariyaratne “Seylan Pahasara” project behalf of the Board within Executive Directors 1 (Director/CEO); for 250 school libraries. the framework of the Chairman Independent authority and responsibility Non-Executive Mr S V Corea zz Implementation of the and work closely with the Quorum (Non-IND NED); Environment and Social representatives of the Director Risk Management Policy Executive Sustainability 2 members Mr D M D K Thilakaratne and System. Committee. (Non-IND NED). zz Initiated the development The GRI (Global Reporting Head of Marketing; Chief Financial Officer of an improved Sustainability Initiative) Sustainability and the Sustainability Manager attended Strategy for the Bank Reporting Guidelines the meetings on invitation. integrated to the business shall be the guideline for model of the Bank. sustainability reporting.

96 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance Scope and Objectives of Present Composition Membership of Directors Highlights of Activities the Committee during the year Board Governance and Independent 2 Mr P L S K Perera Recommended to the Board: Compliance Committee Non-Executive Directors (IND NED); – Chairman; zz the Fit and Proper Persons To assist the Board in Non-independent 2 Mr W M R S Dias Policy for the Bank. adopting appropriate Non-Executive Directors (Non-IND NED); zz the Policy Governing governance standards for the Executive Directors Nil Bank in fulfilling the Board’s Chairman Independent Ms M C Pietersz Insider Dealing. responsibility for oversight Non-Executive (IND NED)/ zz the Policy on Seeking of the corporate governance Quorum Senior Director; processes and practices and Director Independent Professional compliance practices of the 2 members Mr S V Corea Advice by Directors. Bank consistent with relevant (Non-IND NED). zz the revised Corporate rules, regulations and Governance Framework directions and principles in Director/CEO and Head of Compliance were of the Bank. force and that may come into present on invitation. zz Terms of Reference of force from time to time. the Committee. Board Strategic Independent 3 Mr A S Wijesinha Reviewed and provided relevant Plan Committee Non-Executive Directors (IND NED) – Chairman; advice and guidance on: Nil zz Operational plan Overseeing, monitoring and Non-Independent Mr K P Ariyaratne providing the necessary Non-Executive Directors 1 (Director/CEO); implementation of the guidance to drive the Independent strategic initiatives. Bank’s four-year Strategic Executive Directors Non-Executive Ms S K Salgado – zz Activity Key Performance Plan 2017-2020 to ensure (IND NED); Indicators by the that the Bank achieves the Chairman Director Business Units. objectives of the Strategic 2 members Mr D R Abeysuriya zz Initiative timelines Plan within the set timelines. (IND NED). for the strategic plan implementation. Quorum zz Roll over of the operationalisation and Senior Management and heads of strategic continuation of the business units attended the meetings on Strategic Plan 2020 invitation. to the process owners. zz Reviewed the strategic plan Board Information Independent 2 Mr D R Abeysuriya with new/revamped strategic Technology Committee Non-Executive Directors (IND NED) – Chairman; imperatives to meet current Nil day challenges consequent To assist the Board in Non-Independent Mr K P Ariyaratne to the rapid and adverse fulfilling its corporate Non-Executive Directors 1 (Director/CEO); changes in the external governance and oversight Independent environment. responsibilities for the Executive Directors Non-executive Mr A S Wijesinha zz Progress made on the Bank’s investments and (IND NED). implementation of the strategy in relation to digital, Chairman Director new/rolled over initiatives. information technology, and 2 members information systems. zz Committee established in 2019 with a Terms of Quorum Reference approved by the Board. zz Overall review of the IT project investments zz IT Strategic Plan Roadmap progress with focus on key digital initiatives zz Key IT projects updates.

Seylan Bank PLC Annual Report 2019 97 Sustainable Stewardship Corporate Governance Membership of the Directors in the Board Subcommittees as at 31 December 2019 and number of Subcommittee meetings attended by the Directors during the year Audit Integrated Human Nomination2 Credit Marketing Sustainability Governance Related Party Strategic Information Plan Technology Risk Resources and and Product and Transactions Management Remuneration1 Development Compliance Review Mr W M R S Dias,  (M)    (M)    (M)   (M) (Non-IND NED/ 4 of 4 4 of 4 3 of 3   4 of 4 Chairman)  (M) (M)    (M)       Mr W D K Jayawardena, 4 of 14 4 of 4 3 of 4 (Non-IND NED/ Deputy Chairman) (C)  (M) (C)  (C)      (M) (M) 14 of 14 4 of 4 7 of 7 4 of 4 4 of 4 4 of 5 Ms M C Pietersz, (IND NED/   (M)     (M) (M) (M)   (M) (M) Senior Director) 4 of 4 21 of 24 2 of 3 3 of 3 3 of 3 2 of 2  (M) Mr K P Ariyaratne, 13 of 14      (M)    (C) (C) (EXD/Chief  (M) 3 of 4 4 of 4 5 of 5 Executive Officer   (C) 7 of 7   (M) 4 of 4    (M) 3 of 3 (M) (M) Mr P L S K Perera, (M) (M) 20 of 24 (M) 4 of 4 4 of 5 (IND NED) 14 of 14 7 of 7 3 of 3 (C) (M) (C) 3 of 3 (M) (C) (M) Mr S V Corea, (M) 2 of 4 22 of 24 (C) 5 of 5 3 of 3 2 of 2 (Non-IND NED) 7 of 7 3 of 3 (M) (M) 3 of 3 (M) Mr A S Wijesinha 23 of 23 (M) 3 of 3 (IND NED) 2 of 2 Ms S K Salgado (M) (C) (IND NED) 3 of 3 2 of 2 Mr D M D K Thilakaratne (Non-IND NED) Mr D R Abeysuriya (IND NED) C – Chairperson of Committee; M – Member of the Committee; NED: Non-Executive Director; IND: Independent Director; EXD: Executive Director 1 – Board Human Resources and Remuneration Committee – One additional special meeting which was held on short notice was not counted for attendance 2 – Board Nomination Committee – Two additional meetings which were held on short notice were not counted for attendance 3 (6) (ii) Board Audit Committee (BAC) and guidelines. Messrs KPMG were effectiveness of the audit processes in 3 (6) (ii) (a)-(ii) (b) () reappointed as the Auditors for the accordance with applicable standards and Members and Chairperson of the Board financial year 2019 by the shareholders best practices in respect of the audit for Audit Committee – Ms M C Pietersz (BSc, at the Annual General Meeting held on the financial year 2019. MBA, ACA, FCA) is an Independent Non- 28 March 2019. Executive Director. She was appointed to 3 (6) (ii) (e) () the BAC as its Chairperson with effect from zz Implementation of guidelines issued by 27 September 2013. Ms Pietersz counts the Central Bank of Sri Lanka. Non-Audit Services – The BAC reviewed over 27 years senior level experience in the non-audit services provided by the finance, banking, accounting and audit. zz The application of relevant accounting External Auditors and was of the view that standards, including the requirements such services were not within the category The BAC comprised four Non-Executive of the Sri Lanka Accounting Standards of services identified as restricted under Directors during the year 2019, three (SLFRS/LKAS) complying with the the guidelines issued by the Central Bank of whom were independent, namely, International Accounting Standards of Sri Lanka for External Auditors relating Ms M C Pietersz, Mr P L S K Perera (IAS) and the International Financial to their statutory duties in terms of Section and Mr D R Abeysuriya. The fourth Reporting Standards (IFRS) in all 39 of Banking Act No. 30 of 1988 and as member, Mr W D K Jayawardena was a material respects. amended by Banking Act No. 33 of 1995. Non-Independent Non-Executive Director. The Policy relating to the engagement zz The Audit and non-audit fees of of non-audit services was reviewed and 3 (6) (ii) (c)-(ii)(d) () the Auditors. revised during the year. BAC’s role with regard to External Auditors – In line with its Terms of A new Audit Partner was engaged by the 3 (6) (ii) (f) () Reference, the BAC has reviewed and/or External Auditors for the Bank’s audit with made relevant recommendations to the effect from the financial year 2019, upon Scope of External Audit – The BAC Board. Matters reviewed by the BAC, during the previous Audit Partner completing the discussed with the External Auditors, the the year, included the following: tenure of five years in line with the five year nature and the scope of audit in respect rotation requirement. The incumbent Audit of the financial year, 2019 at a meeting zz Reappointment of M/s KPMG, Partner was not engaged in the Bank’s held with the Auditors in the last quarter of Chartered Accountants as the Bank’s audit prior to the current engagement. 2019. The BAC shared their understanding External Auditors for audit services in of the management’s internal controls compliance with the relevant regulations Representations were submitted by over financial reporting; the preparation of the External Auditors stating their independence, the objectivity and

98 Seylan Bank PLC Annual Report 2019 Sustainable Stewardship Corporate Governance financial statements in accordance with issued appropriate recommendations and 3 (6) (ii) (k) () the relevant accounting principles and guidance to ensure that issues were duly reporting obligations and compliance with addressed by the management. Findings of the Internal Audit – Internal the Banking Act Directions on Corporate Audit findings highlighting major/high risk Governance. The audit of the Bank’s 3 (6) (ii) (j) I and (ii) (j) VI () issues were reported to the BAC and taken subsidiary was also carried out by the up at the BAC Meetings that followed same External Auditor and therefore, there Internal Audit Scope and Functions – The which reviewed the status including was no requirement for coordination with Bank has in place an Internal Audit Charter management responses and provided more than one audit firm. which was reviewed and approved during appropriate advice and recommendations, the year 2019. The BAC reviewed the where necessary. 3 (6) (ii) (g) () adequacy of the internal audit function and ensured that it conformed to the 3 (6) (ii) (l) () Review of the Bank’s Financial principles of the Internal Audit Charter Invitees to the Meetings of the BAC – Information – Prior to submitting to the which defines the scope, functions, The Chief Financial Officer and the Head Board’s review and approval, the BAC authority, responsibility, adjudication, of Internal Audit attended the regular reviewed/commented/recommended external relationship management, meetings of the BAC during the year. as appropriate on the Bank’s financial and ethics that assist and direct/guide The Chief Executive Officer and heads information and reports which were the Internal Audit Department (IAD) to of operational and business units, submitted by the Chief Financial Officer discharge its functions effectively. The Information Technology and Human and ensured the relevance of the financial BAC has ensured that the Internal Audit Resources were invited to the Meetings statements prepared for disclosure and function was independent of the activities when necessary to report on action taken published in the Bank’s Annual Report it audits and that it was performed on relevant audit issues and follow up and in the quarterly Financial Statements with impartiality, proficiency and due actions needed on audit findings. These and reports. The drafts of the quarterly professional care. were discussed and/or agreed upon. The Financial Statements were reviewed by BAC also met with the External Auditors the Internal Audit and any comments or 3 (6) (ii) (j) II () on two occasions in the absence of the recommendations made by them were Director/CEO (Executive Director) and the taken into consideration and incorporated Internal Audit Plan/Programme – The IAD management members. as appropriate, before they were submitted carried out its responsibilities in line with to the BAC by the Chief Financial Officer. the approved Audit Plan of the Internal 3 (6) (ii) (m) () The BAC also reviewed the Audited Interim Audit for the year 2019. The IAD reported Financial Statements for the half year on the audits carried out and also updated Authority to Investigate – The Terms of ended 30 June 2019 prior to submitting to the status/extent of resolution of findings Reference of the BAC provides the BAC the Board for review and approval. of the audits carried out to the BAC. The the authority to investigate into any matter BAC reviewed and issued appropriate within the scope of its Terms of Reference; 3 (6) (ii) (h) () recommendations and ensured that the obtain the resources which it needs to relevant line management took steps to carry out the investigation; full access to Meeting with the External Auditors – The address and resolve the audit findings. information; authority to obtain external BAC met with the External Auditors without The Internal Audit Plan/Programme in professional advice; and to invite any the presence of the management and the respect of the year 2019 was approved persons with relevant experience to be Director/CEO twice during the year and by the BAC at a meeting held in January involved, if necessary. discussed important issues and matters 2019, whilst that of the year 2020 was arising from the interim and final audits. reviewed and approved at a meeting held 3 (6) (ii) (n) and 3 (6) (ii) (p) () The External Auditors were also invited in December 2019. to meetings of the BAC to present and Meetings of the BAC – The BAC held highlight key audit findings of the 2018 3 (6) (ii) (j) III () fourteen meetings during the year with year-end audit, of the 2019 half-year due notice. These included separate audit, and also to present the Audit Plan Appraisals/assessments of performance meetings for reviewing the quarterly of the 2019 year-end audit. of Senior Staff of the Internal Audit – The Financial Statements, meetings with the BAC noted the performance appraisals External Auditors and for the review of The BAC ensures that there would be of the senior staff of the Internal Audit the IFRS nine impact and quantification. no limitation of scope or incidents that Department. The KPIs for 2019 of the The Agenda and the papers for could have a negative impact on the Head of Internal Audit was agreed by discussions and consideration/approval effectiveness of the external audit. the BAC. The Committee also carried out were circulated prior to the Meeting. an evaluation of the performance of the The minutes of the proceedings of the 3 (6) (ii) (i) () Head of Internal Audit and also noted the Meetings were recorded in sufficient performance appraisals of the unit heads detail and maintained by the Company Management Letter of the External of the Internal Audit. Secretary who functioned as the Auditors – The BAC reviewed the Secretary to the Committee. Management Letter in respect of the 3 (6) (ii) (j) IV and V () Audit conducted for the financial year 3 (6) (ii) (o) () ended 31 December 2018 and the action Adequacy of human resources for Internal agreed to by the management and/or Audit function – The BAC reviewed Report of the BAC – A Report of the BAC their responses thereto. The BAC also the adequacy of the resources for the signed by the Chairperson is included on reviewed the External Auditors’ findings internal audit functions. There were page 104 of this Annual Report outlining and observations on the Interim Audit of neither appointments nor cessation of the scope and activities of the BAC. The the six months ended 30 June 2019 and employment of any of the senior staff meetings and appropriate reference to members of Internal Audit during the year. the attendance of the members at the