Cargills Bank, a relatively recent venture of the Cargills group, will continue its journey to become the most inclusive retail bank under the tenure of new Managing Director/CEO Senarath Bandara. The bank has ambitious plans to expand its services to the Agriculture and SME sector while continuing to grow its core Retail Banking segment.
Backed by the broader Cargills group, the bank is well placed to expand. The expansion will be focused on the Retail, Agriculture and SME sectors, and supported by selective growth of the Corporate portfolio. The strength of the broader Cargills group has supported Cargills Bank to serve the needs of its customers while maintaining a lean operation.
 Senarath Bandara |
An inclusive banking ethos has been fostered to ensure that all operations of the bank are societally beneficial. The new focused areas of lending will help regional economic activity and spread income and credit more evenly throughout the populous.
Farming focus
Bandara noted that the recent budget was very positive for the agricultural sector. He noted that due to the policy framework they could expect consistency for the next 4 to 5 years period. This combined with targeted concessions to the agriculture sector means that the expanded lending focus is well-timed. Bandara noted that though farmers had been allowed to operate during the lockdown period there were challenges with regards to distributing the grown produce for sale.
Growth potential
As a smaller bank with a well laid out business expansion strategy Bandara noted that they would be able to grow faster than the industry average. He noted that there were plentiful opportunities within the broader Cargills group ecosystem and the Bank would reach economies of scale.
Bandara felt that the bank as a business proposition was noticeably different from the competition.
Service outlets
Cargills supermarkets currently serve as extended service locations of Cargills Bank, bringing accessibility of the bank to consumers in line with longstanding banks. Customers are able to do common banking transactions through supermarket outlets till as late as 10:30 pm.
With over 420 Cargills Food City locations that are centrally located and have parking, this is a strong unique selling point for the firm. The supermarkets are well equipped with security on-site making them safer than ATMs for consumers, especially during non-banking hours.
Digital Payments
As a relatively new entrant into the banking sphere, Cargills Bank benefits from not having outdated legacy software and databases. This allows the bank to be a quick adopter of new digital technology. The Bank is supporting the development of the digital payments industry and presently is the acquiring bank for six Fintech companies that allow customers to make payments to a variety of merchants.
Cargills Bank has also actively promoted the usage of LankaQR payments and facilitated Cargills Food City to become the first supermarket chain in the country to accept digital payment under the LankaQR system. The bank and the broader group have fully embraced the digital strategy of the Central Bank.
Meanwhile, the bank is also currently running a campaign to promote its own digital interfacing with their client base. The bank sees digital as the future and has incorporated this into their strategy.
CSR
The broader Cargills group has incorporated CSR into its business model, contributing to the farmer and regional economic development by directly purchasing over Rs.8Bn of Agriculture and Dairy produce per annum and undertaking many initiatives for Dairy and Agriculture Development. Similarly, Cargills Bank offers low-cost financing schemes to these Sectors through Central Bank refinance schemes for Sri Lanka’s Agriculture and Dairy development. Another initiative launched by the Bank is the CargillsVillage to Home initiative, which connects micro and small-scale suppliers with a marketplace by enabling them to sell their products in stalls located on the parking premises of select Cargills Food City outlets.
Credit Score
Cargills Bank has already implemented a credit scoring mechanism that utilizes an individual or entities’ credit score compiled by the Credit Information Bureau of Sri Lanka, in addition to other Risk Evaluation metrics.
The bank at a policy level has decided not to engage in gold pawning. The bank does however offer all other banking services in line with its peers.
Diversification
Cargills bank with its wide reach and exposure to various lending products has a well-diversified balance sheet. The bank is not overly exposed to economic activity in one region and/or in one sector. The bank maintains arm’s length dealing with all related companies within the Cargills group in line with Central Bank regulations and Cargills Group Policy.
Banking policy
Bandara noted that the lending target and mortgage rate cap policy of the Central Bank would likely impact the entire sector equally. He noted that the bank was well placed to compete with its sector peers given the improvement in the funding mix over the past year, as they have been able to improve their low-cost funding base and were able to manage their cost of funds.
COVID-19
Bandara noted that some businesses had not made allowances for potential widespread disruption to business activity as had been experienced during the COVID-19 lockdown. He noted that the business model of the bank had become more digitally focused during the period to overcome these challenges.
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