ECONOMYNEXT - Sri Lanka's Hatton National Bank, the country's second-largest private lender, expects to grow loans 17 percent in 2017 with a focus on small and medium industry and personal banking, after an 18 percent growth last year.
"We have projected 17 percent (loan growth)," Chief Executive Jonathan Alles said.
The bank's portfolio was 48 percent corporate and 52 percent personal. Alles said the bank had focussed on small and medium industries, where margins were better.
HNB would focus on driving SMEs and personal banking. Housing was a sector they wanted to grow 15-20 percent, but the bank was cautious about high-end apartments, Alles said.
HNB had grown its securities portfolio 15 percent to Rs89.9 billion. Its portfolio had a maturity profile of around 3 years, and the bank was positioned to expand when rates peaked, he said.
Some stress was expected from the drought in micro-finance and agriculture lending, but HNB was prepared to manage it, officials said.
The bank had given floating rate loans in the recent past, expecting rates to go up, which had helped protect profits.
Customers were now increasingly demanding longer-term fixed deposits, and the bank would focus on driving its current and savings deposits this year, he said.
HNB grew its loan book 18 percent to Rs597 million in 2016. Group profits grew 40 percent to Rs14.7 billion in 2016, giving earnings of Rs35.73 per share. In the December quarter, profits grew 14 percent to Rs4.0 billion.
Alles said HNB minimised loan losses with stronger collections with two large recoveries involving a loan to a Maldives hotel group and a domestic plantation.
HNB has also outsourced recoveries, which had improved, and this was helping. The non-performing loan ratio was down to 1.8 percent to 2.43 percent at bank level.