The Bank closed the first quarter ending March 31 2015 with a post-tax profit of Rs. 493 Mn underpinned by a moderate growth of 9% in operating income and a commendable containment of operating expenses growth to 5% over the corresponding quarter.
These levels of growth in income and expenses resulted in the Bank improving core operating margins considerably but was somewhat hindered by higher impairment charges which impacted bottom line growth.
Net interest income recorded a growth of 8% over the previous period as the low interest rate operating environment brought about many challenges on asset re-pricing which was partly off-set by reducing cost of liabilities with the re-pricing of shorter tenor deposits.
The resultant drop in interest income of 8% over previous period was offset by the drop in interest expenses of 22%.
Overall, Banks NIMs did not record any significant movement as continuous efforts to grow low cost deposits improved the deposit mix which also assisted in reducing the cost of liabilities.
Net fees and commission income recorded a growth of 20% for the period under review driven by credit card fee based income.
Net trading income recorded a loss for the period owing to marked to market losses on the FIS portfolio as a result of unfavorable movements in the underlying Government Securities yields.
Bottom line growth for the current period slowed due to higher impairment charges amounting to Rs.530 Mn. The impairment charge for the period increased by 73% as compared to the corresponding period of 2014. This is primarily due to a one off charge where specific facilities have been fully provided. The drop in collective impairment for the current quarter is mainly attributable to charges made on account of pawning portfolio in the corresponding period.
Commenting on the results and achievements, Renuka Fernando, Director/CEO stated “We are pleased with the performance of the Bank in the quarter, which has withstood multiple challenges of narrowing NIMs, slow demand for credit, higher impairment charges and talent retention. We will remain undeterred and focused as we relentlessly pursue our goal to become ‘The Primary Bank’ for our target customer segments”.
www.dailynews.lk
These levels of growth in income and expenses resulted in the Bank improving core operating margins considerably but was somewhat hindered by higher impairment charges which impacted bottom line growth.
Net interest income recorded a growth of 8% over the previous period as the low interest rate operating environment brought about many challenges on asset re-pricing which was partly off-set by reducing cost of liabilities with the re-pricing of shorter tenor deposits.
The resultant drop in interest income of 8% over previous period was offset by the drop in interest expenses of 22%.
Overall, Banks NIMs did not record any significant movement as continuous efforts to grow low cost deposits improved the deposit mix which also assisted in reducing the cost of liabilities.
Net fees and commission income recorded a growth of 20% for the period under review driven by credit card fee based income.
Net trading income recorded a loss for the period owing to marked to market losses on the FIS portfolio as a result of unfavorable movements in the underlying Government Securities yields.
Bottom line growth for the current period slowed due to higher impairment charges amounting to Rs.530 Mn. The impairment charge for the period increased by 73% as compared to the corresponding period of 2014. This is primarily due to a one off charge where specific facilities have been fully provided. The drop in collective impairment for the current quarter is mainly attributable to charges made on account of pawning portfolio in the corresponding period.
Commenting on the results and achievements, Renuka Fernando, Director/CEO stated “We are pleased with the performance of the Bank in the quarter, which has withstood multiple challenges of narrowing NIMs, slow demand for credit, higher impairment charges and talent retention. We will remain undeterred and focused as we relentlessly pursue our goal to become ‘The Primary Bank’ for our target customer segments”.
www.dailynews.lk
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