By Ishara Gamage
Ceylon Finance Today: Sri Lanka's second-biggest privately owned lender by assets Hatton National Bank (HNB) Plc is ready for next generation digital transformation, acquisitions and overseas expansion, the bank's Chief Executive Officer (CEO) Jonathan Allas said on Wednesday (2nd).
Alles, who's also the Chairman of Sri Lanka Banks Association, said that HNB, which has a 51% stake in HNB Grameen Finance (Pvt.) Ltd., said they will be planning to list its micro finance entity during this year.
"We are extremely satisfied with HNB Grameen's performances and HNB as a parent company is a major funding arm of HNB Grameen," he said. "SME and micro lending is our main focus. HNB together with HNB Grameen Finance (Pvt) Ltd is ready to speed up our SME and micro lending network," Alles said.
Addressing an HNB investor forum, he said that they are willing to invest over two billion rupees to achieve the Bank's digital transformation within the next three years.
"Sri Lankan consumers move online, retail banks will have to follow. We are fully committed to fulfil our customer aspirations. We will be moving into kiosk type operations to complement our 'brick and mortar' presence which will also cut down the need for drastic capital funding", said Alles.
During 2012/13 financial year the bank wrote off over two billion rupees worth of pawning loans. "We have learned lessons from the past and now our pawning portfolio has almost come down to 3% of our total loan portfolio, bank officials said.
HNB recorded an expense growth of 14% YoY, driven by 13% YoY growth in personnel expenses and a 30% YoY increase in HNB Assurance's claims expenses.
According to banking sector analysis, HNB remains well capitalized with a Tier I ratio of 10.99% and a total capital ratio of 13.10%.
www.ceylontoday.lk
Ceylon Finance Today: Sri Lanka's second-biggest privately owned lender by assets Hatton National Bank (HNB) Plc is ready for next generation digital transformation, acquisitions and overseas expansion, the bank's Chief Executive Officer (CEO) Jonathan Allas said on Wednesday (2nd).
Alles, who's also the Chairman of Sri Lanka Banks Association, said that HNB, which has a 51% stake in HNB Grameen Finance (Pvt.) Ltd., said they will be planning to list its micro finance entity during this year.
"We are extremely satisfied with HNB Grameen's performances and HNB as a parent company is a major funding arm of HNB Grameen," he said. "SME and micro lending is our main focus. HNB together with HNB Grameen Finance (Pvt) Ltd is ready to speed up our SME and micro lending network," Alles said.
Addressing an HNB investor forum, he said that they are willing to invest over two billion rupees to achieve the Bank's digital transformation within the next three years.
"Sri Lankan consumers move online, retail banks will have to follow. We are fully committed to fulfil our customer aspirations. We will be moving into kiosk type operations to complement our 'brick and mortar' presence which will also cut down the need for drastic capital funding", said Alles.
He also said the expansion of the branch network is not going to be a major ambition going forward unless if there were highly profitable strategic locations.
HNB which account for over 10% Sri Lankan banking sector market share are also looking at possible banking and finance sector acquisitions. "Sri Lanka needs a few larger banks to show our banking strength globally. As a group HNB has the required potential to acquire certain strategic businesses", he said.
Alles said they were already lending in the Maldives and also to South East Asia's developing economies like Cambodia, whilst planning to open a representative office in Myanmar.
"We had loaned around 100 million in dollar loans to health, hotel and micro finance sector institutions in those countries in partnership with other lenders, he said. Alles said the margins in dollar loans to the Maldives were higher than in Sri Lanka and closer to 7%.
He also said after carefully evaluating Myanmar's socioeconomic and investment situation, they have a plan to open a representative office in Myanmar. HNB may also look at "placing debt or taking equity stakes in companies" in the Asia-Pacific region.
"Going overseas is good for revenue growth, however, our main focus is in Sri Lanka', said Alles. HNB reported a net profit of Rs 3.6bn (-2% YoY) for 4Q2015, and Rs 10.6bn (+7% YoY) for 2015. Net interest income was RS 30bn (+14% YoY) in 2015, supported by a 25% YoY gross loan growth to RS 519bn. The Bank is expecting to grow its loan portfolio 15 % in this year, backed by small and medium enterprises and personal banking.
HNB's lending portfolio was expected to remain about 60 % to retail and 40 % among corporates, saw growth prospects in term loans and leases, Alles said. Leasing vehicles picked up sharply from Rs 24 to 40 billion. He said car leases have already slowed due to Central bank restrictions. However, they were seeing a pick-up in housing loans. "Higher state sector salaries and a planned tax cut and increasing disposable income, will......provide a greater potential for personal loans," he predicted.
HNB which account for over 10% Sri Lankan banking sector market share are also looking at possible banking and finance sector acquisitions. "Sri Lanka needs a few larger banks to show our banking strength globally. As a group HNB has the required potential to acquire certain strategic businesses", he said.
Alles said they were already lending in the Maldives and also to South East Asia's developing economies like Cambodia, whilst planning to open a representative office in Myanmar.
"We had loaned around 100 million in dollar loans to health, hotel and micro finance sector institutions in those countries in partnership with other lenders, he said. Alles said the margins in dollar loans to the Maldives were higher than in Sri Lanka and closer to 7%.
He also said after carefully evaluating Myanmar's socioeconomic and investment situation, they have a plan to open a representative office in Myanmar. HNB may also look at "placing debt or taking equity stakes in companies" in the Asia-Pacific region.
"Going overseas is good for revenue growth, however, our main focus is in Sri Lanka', said Alles. HNB reported a net profit of Rs 3.6bn (-2% YoY) for 4Q2015, and Rs 10.6bn (+7% YoY) for 2015. Net interest income was RS 30bn (+14% YoY) in 2015, supported by a 25% YoY gross loan growth to RS 519bn. The Bank is expecting to grow its loan portfolio 15 % in this year, backed by small and medium enterprises and personal banking.
HNB's lending portfolio was expected to remain about 60 % to retail and 40 % among corporates, saw growth prospects in term loans and leases, Alles said. Leasing vehicles picked up sharply from Rs 24 to 40 billion. He said car leases have already slowed due to Central bank restrictions. However, they were seeing a pick-up in housing loans. "Higher state sector salaries and a planned tax cut and increasing disposable income, will......provide a greater potential for personal loans," he predicted.
NIM for the quarter was 4.31%, down from 4.85% in 4Q2014, while 2015 NIM was 4.37% (vs. 4.63% in 2014). HNB's non-interest income grew 9% YoY, driven by a 23% YoY growth in net fee and commission income, and a 22% YoY increase in premium income from HNB Assurance.
There was a trading gain of Rs 361mn vs. a loss of Rs 442mn in 2014. However, HNB's gains from financial investments declined to Rs 298mn from Rs 1.5bn in 2014. Impairment charge for 2015 was Rs.1bn (-60% YoY), due to an improvement in asset quality as Non-performing loan ratio improved to 2.43% from 3.16% in 2014.
There was a trading gain of Rs 361mn vs. a loss of Rs 442mn in 2014. However, HNB's gains from financial investments declined to Rs 298mn from Rs 1.5bn in 2014. Impairment charge for 2015 was Rs.1bn (-60% YoY), due to an improvement in asset quality as Non-performing loan ratio improved to 2.43% from 3.16% in 2014.
During 2012/13 financial year the bank wrote off over two billion rupees worth of pawning loans. "We have learned lessons from the past and now our pawning portfolio has almost come down to 3% of our total loan portfolio, bank officials said.
HNB recorded an expense growth of 14% YoY, driven by 13% YoY growth in personnel expenses and a 30% YoY increase in HNB Assurance's claims expenses.
According to banking sector analysis, HNB remains well capitalized with a Tier I ratio of 10.99% and a total capital ratio of 13.10%.
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