Sampath Bank has recorded an impressive profit after tax growth of 67.5% to Rs. 2.68 billion during the first half of 2014 from a year earlier.
Apart from the drop in net charge against pawning advances (interest losses at auctions + impairment) by Rs. 407 m, strong improvements in net fee and commission income (Rs. 273 m), net trading income (Rs. 225 m), other operating income (Rs. 184 m) and drop in individually significant impairment charge (Rs. 278 m), contributed towards this improvement in profits.
Sampath Bank Group too has recorded a profit after tax of Rs. 2.82 b for the six month ended 30 June 2014, a growth of 66% compared to Rs. 1.69 b for the first six months in 2013.
NII, which is the main source of income from the fund based operations and representing over 63% of the total operating income, decreased from Rs. 6,871 m in the 1H 2013 to Rs. 5,261 m in 1H 2014, recording a drop of 23.4%. This drop in NII was largely due to the incurred interest loss from auctioned pawned articles during the period which amounted to Rs. 2,528 m.
In addition, gradual drop in the volume of high yielding pawning advances granted in the past, and industry wide slow credit growth coupled with the downward pressure on interest margins also caused the drop in NII.
Net fee and commission income of the bank totalled Rs. 1,478 m for the six month ended 30 June 2014, which is an increase of 22.7% over the six months ended 30 June 2013. This growth was mainly in line with growth of business volumes in the trade related services, card operations and inward remittances.
Other operating income recorded an increase of Rs. 183.9 m from Rs. 1,054 m in the first six months of 2013 to Rs. 1,238 m for the corresponding period this year. The major contributory factors for this increase are higher bad debt recoveries and Exchange Income from currency notes operations.
Operating expenses of the bank which stood at Rs. 5,036 m in the first six months 2013 rose to Rs. 5,640 m during the same period in 2014, recording an increase of Rs. 604 m (12%). This growth in operating expenses was largely due to increase in staff cadre coupled with salary increments given to the staff with effect from 1 April 2014.
Since the bank has now adequately covered most of the strategic locations of the country, only a moderate expansion of its branch network is expected in the coming years. This will also help to manage the increase in costs.
The individually significant impairment charge dropped by Rs. 278 million. In addition, total collective impairment reversal amounted to Rs. 1,668 m in 1H 2014, compared to a charge of Rs. 1,119.6 m in 1H 2013. This was mainly due to the reversal of collective impairment made against the pawning advances in 2013, owing to the slight increase in gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier. The impairment reversal against the pawning portfolio for the half year amounted to Rs. 1,736.3 m, as against a charge of Rs. 989.5 m in 1H 2013.
The bank continued to reduce the pawning portfolio (including interest receivable) in view of the volatility in gold prices which impacted the entire financial services sector since April 2013. The bank’s pawning advances which stood at 19.7% of the total advances as at 31 December 2013 was reduced to 12.9% as at 30 June 2014.
Total deposits as at 30 June 2014 stood at Rs. 321 b with a growth rate of 6.1% compared to total deposits as at 31 December 2013. The bank’s total assets and total advances as at 30 June 2014 stood at Rs. 385 b and Rs. 254 b respectively which was a growth of 0.9% and a decline of 2.4% respectively compared to the figures reported as at 31 December 2013.
The marginal growth in total assets was mainly due to the repayment of the syndicated loan of $ 100 m during the period. The negative growth of customer advances was mainly due to reduction in pawning advances. However, the advances other than pawning recorded a growth of Rs. 10.9 b during the period, despite the low credit demand experienced in the market.
The cost to income ratio has increased from 59.0% in the first six month of 2013 to 76.7% in the first six month of 2014. This was mainly due to the drop in net interest income by 23.4 % owing to the incurred interest loss on pawning articles auctioned. If the interest loss on pawning advances were ignored, the cost to income ratio would be around 58.9%.
During the period of 1H2014, reversal of corporate tax excess provisions made in previous years helped to show higher growth rate of after tax profit than before tax profit. ROA and ROE increased in line with the increase in profits during the first six months of 2014 and these ratios stood at 1.4% and 18.77% respectively. The statuary liquid ratio stood at 27.93% as at end June 2014, showed only a slight increase of 0.31% compared to the position as at 31 December 2013.
The capital adequacy ratios stood at 9.85% (Tier 1) and 13.25% (Total) as at 30 June 2014, recording a marginal deterioration compared to the levels as at 31 December 2013, mainly due the payment of dividend for 2013 and increase of risk weighted asset for credit risk.
Nevertheless, both these ratios remained well above the minimum regulatory requirements of 5% and 10% respectively.
Sampath Bank has demonstrated its ability to grow by focussing on enhancing customer experiences through improved service quality effectively combining human resources and technological innovation. It has proved resilient to external shocks through effective risk management processes and its ability to respond to changes in its operating environment.
Further, as a premier responsible corporate citizen in Sri Lanka, Sampath Bank is continuing to focus and invest in development projects in vital areas of the country’s economy, such as education, environment, community-based developments, etc.
Sampath Bank has been selected as the ‘Best Bank in Sri Lanka – 2014’ by the prestigious global business magazine Euromoney, for the consecutive second year. At the National HRM Conference 2014, Sampath Bank won the ‘Talent Management Award,’ which is presented to organisations based on overall excellence demonstrated in all spheres of HR.
Sampath Bank was awarded the prestigious Best Community Program Leadership Award at the Asia Responsible Business Excellence Awards – 2014 in recognition of its unstinted commitment and dedication as a socially responsible corporate citizen in uplifting the living standards of Sri Lankans, through numerous community projects and awareness programs. The Sampath Bank website won the Silver award at the BestWeb.LK 2014 Competition in the Corporate, Banking, Finance & Insurance category.
In the rating assessment for 2014, considering the healthy asset quality, better compliance, transparency, capital adequacy, internal control systems and processes of the bank, Fitch Rating Lanka has reaffirmed the National Long Term Rating AA-(lka), with a Stable Outlook.
www.ft.lk
Apart from the drop in net charge against pawning advances (interest losses at auctions + impairment) by Rs. 407 m, strong improvements in net fee and commission income (Rs. 273 m), net trading income (Rs. 225 m), other operating income (Rs. 184 m) and drop in individually significant impairment charge (Rs. 278 m), contributed towards this improvement in profits.
Sampath Bank Group too has recorded a profit after tax of Rs. 2.82 b for the six month ended 30 June 2014, a growth of 66% compared to Rs. 1.69 b for the first six months in 2013.
NII, which is the main source of income from the fund based operations and representing over 63% of the total operating income, decreased from Rs. 6,871 m in the 1H 2013 to Rs. 5,261 m in 1H 2014, recording a drop of 23.4%. This drop in NII was largely due to the incurred interest loss from auctioned pawned articles during the period which amounted to Rs. 2,528 m.
In addition, gradual drop in the volume of high yielding pawning advances granted in the past, and industry wide slow credit growth coupled with the downward pressure on interest margins also caused the drop in NII.
Net fee and commission income of the bank totalled Rs. 1,478 m for the six month ended 30 June 2014, which is an increase of 22.7% over the six months ended 30 June 2013. This growth was mainly in line with growth of business volumes in the trade related services, card operations and inward remittances.
Other operating income recorded an increase of Rs. 183.9 m from Rs. 1,054 m in the first six months of 2013 to Rs. 1,238 m for the corresponding period this year. The major contributory factors for this increase are higher bad debt recoveries and Exchange Income from currency notes operations.
Operating expenses of the bank which stood at Rs. 5,036 m in the first six months 2013 rose to Rs. 5,640 m during the same period in 2014, recording an increase of Rs. 604 m (12%). This growth in operating expenses was largely due to increase in staff cadre coupled with salary increments given to the staff with effect from 1 April 2014.
Since the bank has now adequately covered most of the strategic locations of the country, only a moderate expansion of its branch network is expected in the coming years. This will also help to manage the increase in costs.
The individually significant impairment charge dropped by Rs. 278 million. In addition, total collective impairment reversal amounted to Rs. 1,668 m in 1H 2014, compared to a charge of Rs. 1,119.6 m in 1H 2013. This was mainly due to the reversal of collective impairment made against the pawning advances in 2013, owing to the slight increase in gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier. The impairment reversal against the pawning portfolio for the half year amounted to Rs. 1,736.3 m, as against a charge of Rs. 989.5 m in 1H 2013.
The bank continued to reduce the pawning portfolio (including interest receivable) in view of the volatility in gold prices which impacted the entire financial services sector since April 2013. The bank’s pawning advances which stood at 19.7% of the total advances as at 31 December 2013 was reduced to 12.9% as at 30 June 2014.
Total deposits as at 30 June 2014 stood at Rs. 321 b with a growth rate of 6.1% compared to total deposits as at 31 December 2013. The bank’s total assets and total advances as at 30 June 2014 stood at Rs. 385 b and Rs. 254 b respectively which was a growth of 0.9% and a decline of 2.4% respectively compared to the figures reported as at 31 December 2013.
The marginal growth in total assets was mainly due to the repayment of the syndicated loan of $ 100 m during the period. The negative growth of customer advances was mainly due to reduction in pawning advances. However, the advances other than pawning recorded a growth of Rs. 10.9 b during the period, despite the low credit demand experienced in the market.
The cost to income ratio has increased from 59.0% in the first six month of 2013 to 76.7% in the first six month of 2014. This was mainly due to the drop in net interest income by 23.4 % owing to the incurred interest loss on pawning articles auctioned. If the interest loss on pawning advances were ignored, the cost to income ratio would be around 58.9%.
During the period of 1H2014, reversal of corporate tax excess provisions made in previous years helped to show higher growth rate of after tax profit than before tax profit. ROA and ROE increased in line with the increase in profits during the first six months of 2014 and these ratios stood at 1.4% and 18.77% respectively. The statuary liquid ratio stood at 27.93% as at end June 2014, showed only a slight increase of 0.31% compared to the position as at 31 December 2013.
The capital adequacy ratios stood at 9.85% (Tier 1) and 13.25% (Total) as at 30 June 2014, recording a marginal deterioration compared to the levels as at 31 December 2013, mainly due the payment of dividend for 2013 and increase of risk weighted asset for credit risk.
Nevertheless, both these ratios remained well above the minimum regulatory requirements of 5% and 10% respectively.
Sampath Bank has demonstrated its ability to grow by focussing on enhancing customer experiences through improved service quality effectively combining human resources and technological innovation. It has proved resilient to external shocks through effective risk management processes and its ability to respond to changes in its operating environment.
Further, as a premier responsible corporate citizen in Sri Lanka, Sampath Bank is continuing to focus and invest in development projects in vital areas of the country’s economy, such as education, environment, community-based developments, etc.
Sampath Bank has been selected as the ‘Best Bank in Sri Lanka – 2014’ by the prestigious global business magazine Euromoney, for the consecutive second year. At the National HRM Conference 2014, Sampath Bank won the ‘Talent Management Award,’ which is presented to organisations based on overall excellence demonstrated in all spheres of HR.
Sampath Bank was awarded the prestigious Best Community Program Leadership Award at the Asia Responsible Business Excellence Awards – 2014 in recognition of its unstinted commitment and dedication as a socially responsible corporate citizen in uplifting the living standards of Sri Lankans, through numerous community projects and awareness programs. The Sampath Bank website won the Silver award at the BestWeb.LK 2014 Competition in the Corporate, Banking, Finance & Insurance category.
In the rating assessment for 2014, considering the healthy asset quality, better compliance, transparency, capital adequacy, internal control systems and processes of the bank, Fitch Rating Lanka has reaffirmed the National Long Term Rating AA-(lka), with a Stable Outlook.
www.ft.lk
No comments:
Post a Comment