ECONOMYNEXT – Sri Lanka's Hatton National Bank (HNB) group reported net profit remained flat at Rs4 billion for the September 2017 quarter compared with the previous year amid a sharp rise in trading losses and provisioning for bad loans.
Diluted earnings per share fell 12% to Rs8.27 in the quarter from the previous year, according to interim accounts filed with the stock exchange. The stock was last traded at Rs263.
Interest income rose 25% to Rs26.9 billion while interest expenses rose 33% to Rs15 billion with net interest income up 15% to Rs11.9 billion.
Net fee and omission income was up 22% to Rs2.3 billion.
However, trading losses during the September quarter rose 165% to Rs1.9 billion from the previous year, the accounts showed.
Individual impairment for loans rose 3,125% to rs386 million and collective impairment rose 1,402% to Rs546 million.
EPS for the nine months to September 2017 were up 3% to Rs25.99 with net profit up 6% to Rs11.3 billion from the previous year.
HNB said in a statement interest income grew by 33.5% in the nine months to September 2017 supported by a 14.9% growth in advances.
The 14.9% year-on-year growth in current account and savings account (CASA) deposits to Rs247.2 billion enabled HNB to improve net interest income by 18.7% to Rs 29.6 billion.
“The interest income was complimented by fee and commission income which grew by 20.4% y-o-y on a net basis, adding Rs 6.1 billion to the bank’s topline,” it said.
“Credit card business, trade finance and guarantee commission continued to be key contributors towards this growth.”
An increase in swap rates as well as the volume of swaps led to the ‘trading loss’ increasing to Rs2.8 billion during the first nine months of 2017 compared to the loss of Rs 1.3 billion in the corresponding period of the previous year, HNB said.
The Non Performing Asset ratio increased to 2.6% as at end of September 2017 while the total impairment charge for the period amounted to Rs 2.3 billion.
The increase in Value Added Tax to 15% from 11% in 2016, led to an increase of 29.6% in VAT and Nation Building Tax charges for the period.
“This resulted in the bank’s profit before tax growth being constrained to 6.3%, leading to a PBT of Rs 15.4 billion for the period,” HNB said.
The bank’s total tax charge for the period (including VAT & NBT) amounted to Rs 8.2 billion with the effective tax rate being 43% for the nine months ended September 2017.
HNB’s asset base grew by 11% to Rs 953.3 billion while net loans and advances reached Rs 625 billion as at end of September 2017. Deposits grew by Rs 76.4 billion during the period to almost Rs 700 billion.
HNB said its rights issue in the third quarter of 2017 enabled it to improve its Tier I and Total Capital Ratios to 12.91% and 16.42% respectively, significantly above the Basel III guidelines as set out by the Central Bank of Sri Lanka.
The capital raised also resulted in Return on Equity declining to 16.1%, while Return on Assets was at 1.6% for the period.
Diluted earnings per share fell 12% to Rs8.27 in the quarter from the previous year, according to interim accounts filed with the stock exchange. The stock was last traded at Rs263.
Interest income rose 25% to Rs26.9 billion while interest expenses rose 33% to Rs15 billion with net interest income up 15% to Rs11.9 billion.
Net fee and omission income was up 22% to Rs2.3 billion.
However, trading losses during the September quarter rose 165% to Rs1.9 billion from the previous year, the accounts showed.
Individual impairment for loans rose 3,125% to rs386 million and collective impairment rose 1,402% to Rs546 million.
EPS for the nine months to September 2017 were up 3% to Rs25.99 with net profit up 6% to Rs11.3 billion from the previous year.
HNB said in a statement interest income grew by 33.5% in the nine months to September 2017 supported by a 14.9% growth in advances.
The 14.9% year-on-year growth in current account and savings account (CASA) deposits to Rs247.2 billion enabled HNB to improve net interest income by 18.7% to Rs 29.6 billion.
“The interest income was complimented by fee and commission income which grew by 20.4% y-o-y on a net basis, adding Rs 6.1 billion to the bank’s topline,” it said.
“Credit card business, trade finance and guarantee commission continued to be key contributors towards this growth.”
An increase in swap rates as well as the volume of swaps led to the ‘trading loss’ increasing to Rs2.8 billion during the first nine months of 2017 compared to the loss of Rs 1.3 billion in the corresponding period of the previous year, HNB said.
The Non Performing Asset ratio increased to 2.6% as at end of September 2017 while the total impairment charge for the period amounted to Rs 2.3 billion.
The increase in Value Added Tax to 15% from 11% in 2016, led to an increase of 29.6% in VAT and Nation Building Tax charges for the period.
“This resulted in the bank’s profit before tax growth being constrained to 6.3%, leading to a PBT of Rs 15.4 billion for the period,” HNB said.
The bank’s total tax charge for the period (including VAT & NBT) amounted to Rs 8.2 billion with the effective tax rate being 43% for the nine months ended September 2017.
HNB’s asset base grew by 11% to Rs 953.3 billion while net loans and advances reached Rs 625 billion as at end of September 2017. Deposits grew by Rs 76.4 billion during the period to almost Rs 700 billion.
HNB said its rights issue in the third quarter of 2017 enabled it to improve its Tier I and Total Capital Ratios to 12.91% and 16.42% respectively, significantly above the Basel III guidelines as set out by the Central Bank of Sri Lanka.
The capital raised also resulted in Return on Equity declining to 16.1%, while Return on Assets was at 1.6% for the period.
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