May 01, 2014 (LBO) - Profits at Sri Lanka's Seylan Bank group rose 3.3 percent to 526 million rupees in the March 2014 quarter from a year earlier, helped by lower interest expenses, despite falling credit growth, interim accounts showed.
The group reported earnings of 1.53 rupees per share. The stock closed at 64.00 rupees, up 1.80 Wednesday.
The bank said interest income rose 0.2 percent to 5.8 billion rupees in the March quarter from a year earlier, but interest expenses fell 7.6 percent to 3.4 billion rupees expanding gross profits 13.7 billion rupees to 2.4 billion rupees.
Customer loans fell 3.4 percent to 131 billion rupees.
Sri Lanka is recovering from a balance of payments crisis, triggered by a credit bubble worsened by state banks loans given to subsidize electricity.
After raising interest rates and energy prices, Sri Lanka is recovering from the crisis, interest rates are falling but credit growth is still weak.
Gross non performing loans rose to 11.68 percent by end March at stand alone bank level from 10.58 percent in December 2013. Non performing loans after provisions rose to 8.72 percent from 7.94 percent.
Loan losses rose to 198 million rupees from a provision reversal of 53 million rupees, a year earlier.
Analysts say a period of de-leveraging and purging of risky loans given during the bubble period is necessary for the banking system to bounce back.
Sri Lankan banks lent heavily against gold at a time when global gold prices bubbled. But gold prices have since fallen and banks have cut exposure to the segment.
Seylan's gold backed loans fell to 11.1 billion rupees by end March from 14.3 billion rupees in December. Overdrafts rose to 40.6 billion rupees, from 38.9 billion rupees and other loans fell to 45.6 billion rupees from 47.8 billion rupees.
But financial instruments available for sale rose 55 percent to 21 billion rupees.
As loan expansion slows or shrinks, banks will buy into Treasuries, helping bring down rates.
Fees and commission income rose 10 percent to 513 million rupees. Trading income rose 128 percent to 241 million rupees with forex gains rising 54 percent to 135 million rupees.
Customer deposits grew to 170 billion rupees from 167 billion rupees.
Net assets fell 0.65 percent to 24.03 billion rupees, while gross assets rose 2.4 percent to 222 billion rupees at group level.
Capital adequacy was maintained at 14.69 percent of risk weighted assets by end March from 14.58 percent in December.
The group reported earnings of 1.53 rupees per share. The stock closed at 64.00 rupees, up 1.80 Wednesday.
The bank said interest income rose 0.2 percent to 5.8 billion rupees in the March quarter from a year earlier, but interest expenses fell 7.6 percent to 3.4 billion rupees expanding gross profits 13.7 billion rupees to 2.4 billion rupees.
Customer loans fell 3.4 percent to 131 billion rupees.
Sri Lanka is recovering from a balance of payments crisis, triggered by a credit bubble worsened by state banks loans given to subsidize electricity.
After raising interest rates and energy prices, Sri Lanka is recovering from the crisis, interest rates are falling but credit growth is still weak.
Gross non performing loans rose to 11.68 percent by end March at stand alone bank level from 10.58 percent in December 2013. Non performing loans after provisions rose to 8.72 percent from 7.94 percent.
Loan losses rose to 198 million rupees from a provision reversal of 53 million rupees, a year earlier.
Analysts say a period of de-leveraging and purging of risky loans given during the bubble period is necessary for the banking system to bounce back.
Sri Lankan banks lent heavily against gold at a time when global gold prices bubbled. But gold prices have since fallen and banks have cut exposure to the segment.
Seylan's gold backed loans fell to 11.1 billion rupees by end March from 14.3 billion rupees in December. Overdrafts rose to 40.6 billion rupees, from 38.9 billion rupees and other loans fell to 45.6 billion rupees from 47.8 billion rupees.
But financial instruments available for sale rose 55 percent to 21 billion rupees.
As loan expansion slows or shrinks, banks will buy into Treasuries, helping bring down rates.
Fees and commission income rose 10 percent to 513 million rupees. Trading income rose 128 percent to 241 million rupees with forex gains rising 54 percent to 135 million rupees.
Customer deposits grew to 170 billion rupees from 167 billion rupees.
Net assets fell 0.65 percent to 24.03 billion rupees, while gross assets rose 2.4 percent to 222 billion rupees at group level.
Capital adequacy was maintained at 14.69 percent of risk weighted assets by end March from 14.58 percent in December.
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