MICROCAPITAL BRIEF: Commercial Bank of Ceylon (ComBank) Secures $50m Loan from CDC Group to Promote SME Lending, Climate Projects in Sri Lanka

The CDC Group, a UK-backed development finance institution formerly known as the Colonial Development Corporation, recently agreed to lend USD 50 million to the Commercial Bank of Ceylon (ComBank) to fund loans to small and medium-sized enterprises (SMEs) as well as climate projects that “support Sri Lanka’s commitment to the Paris Agreement.” Sri Lanka’s goals related to climate change include “to become energy self-sufficient by 2030 and reach 100 percent renewable energy generation by 2050.” The funds from CDC are to be used for purposes such as mitigating greenhouse gas emissions in transport, heavy industry and waste management. For the SME lending, the goal is to reach “SMEs most in need of funding, enabling them to access necessary working capital to strengthen their operations, maintain employment and grow their business.”

Founded in 1920, ComBank has subsidiaries providing financial, information technology and property development services in Bangladesh, Italy, Myanmar and Sri Lanka. For the year ending 2020, ComBank reported return on assets of 1.5 percent and return on equity of 11.3 percent. As of December 2020, the firm’s financial services subsidiaries reported customer deposits of LKR 1.3 trillion (USD 6.5 billion) and outstanding loans of LKR 962 billion (USD 4.8 billion).

Established in 1948, the mission of CDC is to foster growth in “sustainable” businesses to raise living standards in developing countries. To do this, it deploys debt, equity and “fund-of-funds” strategies in Africa and South Asia. As of 2020, CDC’s investment portfolio was valued at USD 6.2 billion, and it reported issuing new commitments worth GBP 1.75 billion (USD 2.47 billion) during that year. This is CDC’s first direct investment in the Sri Lankan market since 2012.

By Arin Atluri, Research Associate

Sources and Additional Resources

CDC press release
https://www.cdcgroup.com/en/news-insight/news/cdc-group-commits-50-million-to-commercial-bank-of-ceylon-to-bolster-sme-lending-and-climate-projects/?fl=true

ComBank homepage
https://www.combank.lk/

ComBank 2020 financials
https://www.combank.lk/info/file/7/for-the-year-ended-31-12-2020

Sri Lanka’s climate change policy
http://www.climatechange.lk/CCS%20Policy/Climate_Change_Policy_English.pdf

Climate Change Secretariat of Sri Lanka homepage
http://www.climatechange.lk

CDC homepage
https://www.cdcgroup.com

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