Resilience and agility enabled us stay ahead of the curve: SDF CEO

Sarvodaya Development Finance (SDF) was Sri Lanka’s first development finance company and continues to remain a market leader in the space. Despite facing several challenges and an adverse economic environment, SDF managed to achieve strong financial KPIs in 2022 through a combination of strategic initiatives, effective cost management, and operational efficiency. 

In this exclusive interview, CEO of Sarvodaya Development Finance, Nilantha Jayanetti provides key insights into the workings of this enduring and dynamic institution and its future outlook. Excerpts: 

SDF has noted significant improvement in financial KPIs in 2022. Could you give us a brief overview of what you have achieved?

Our proactive monitoring of the macroeconomic environment has allowed us to make necessary adjustments to our strategies, enabling us to navigate through economic headwinds and achieve our financial goals. 

Our exceptional financial performance can be attributed to effective cost management, operational efficiency, and strategic investments. The strong financial position we have now built also reflects our commitment to delivering value to our stakeholders, and we are now poised for sustainable growth in the years to come.

What were the major factors that contributed to Sarvodaya’s performance in the last financial year?
SDF’s remarkable financial performance last year is a direct result of our sharp and concerted focus on building trust amongst our stakeholders – creating a ‘trust circle’ amongst our valued depositors/customers, staff, rating agencies, local banks, and international lenders. This trust-based approach enabled us to achieve 42 percent growth in our fixed deposit portfolio during one of the most challenging economic periods.

Our impressive collection and recoveries performance also surpassed the previous year’s record, despite initially lagging due to the ‘Aragalagaya’. Additionally, our credit ratings were upgraded, attesting to our strong financial position – at a time when many others had their ratings revised downwards.

We are also proud to say that we were able to maintain our relationships with banks and creditors without requesting moratoriums or rescheduling of our facilities, further solidifying our financial position and reputation within the industry. We were also able to secure two foreign credit lines to support the farming community, which is an important step towards supporting Sri Lanka’s economic recovery.

All of these together, contributed towards helping us achieve and exceed our financial KPIs last year.

What were the challenges and or obstacles that SDF faced in terms of achieving its financial KPIs in 2022?
The challenges of the last financial year began with the Aragalaya, which started with the incidents at Mirihana. This was added to by the country’s other economic downturns, making it difficult for us to forecast strong financial performance at the start of the year. But we were undeterred. 

Working as a team, we took a proactive approach to overcome challenges and propel SDF in the right direction. Our focus on effective planning and creating confidence among our team and stakeholders was crucial to our success. We monitored the macroeconomic environment closely and made constant adjustments to ensure we always performed to the best of our ability. Therefore, despite the uncertainties and challenges, our resilience and agility helped us stay ahead of the curve.

Can you tell a bit more about the key strategic initiatives you mentioned and how they helped boost the company’s financial performance?
Managing our balance sheet effectively was pivotal to our success. While profit and loss accounts are important, it is the balance sheet that really matters, as it shows the true financial position of the company. 
So, we made it our mission to ensure the strength of our balance sheet, which enabled us to achieve robust financial performance during FY 2022/23. By optimizing our asset and liability mix and improving the quality of our loan portfolio, we were able to minimize our credit risks and enhance our overall financial position.
Our prudent approach to risk management, coupled with our effective cost management measures and operational efficiency, further bolstered our financial performance. We also continued to invest strategically in our business, focusing on key growth areas and leveraging emerging opportunities to drive sustainable long-term growth.

What are your future outlook and projections with regard to the financial performance you expect in the near to medium term?
Looking ahead, we have a positive outlook on Sarvodaya’s financial performance in the near to medium term. Our brand has become an undisputed household name throughout the country, and we are confident that our strong reputation and commitment to creating value for the Sri Lankan community will continue to pay dividends.
As the first-ever development finance company in Sri Lanka, we are uniquely positioned to capitalize on the many growth opportunities that lie ahead. We have a well-defined strategy for growth that includes expanding our lending portfolio, investing in new technologies and innovative solutions, and deepening our relationships with key stakeholders. We are also closely monitoring the macroeconomic environment to ensure that we are well-prepared to navigate any challenges that may arise.