ECONOMYNEXT - Profits at Sri Lanka's Hatton National Bank group which includes an insurer grew 21 percent to 4.62 billion rupees, with net interest income expansion moderated by a higher loan loss charges, interim accounts showed.
The group reported earnings of 9.38 rupees for the quarter. The stock closed at 188.50 down 30 cents on Monday.
At standalone bank level net profits grew 22 percent to 4.47 billion rupees.
Group net interest income grew 13 percent to 12.15 billion rupees, with interest income growing 11 percent to 27.09 billion rupees and interest expenses growing at a slower 9 percent to 14.85 billion rupees.
Specific loan losses grew from 42 to 114 million rupees and general provisions rose sharply to 1.47 billion rupees from 397 million rupees, which the bank said was due to "adverse drought and market conditions.
The bank grew its loan book 5 percent to 691 billion rupees.
The gross non-performing loan ratio of the Bank slid to 2.72 in Mach from 2.28 percent in December, and the banks said industry average NPLs had fallen to about 3.0 percent.
"The banking sector is challenged by the implementation of SLFRS (Sri Lanka Financial Reporting Standard) 9 reporting standards which could result in higher impairment charges, Basel III regulations requiring greater capital buffers as well as the new Inland Revenue act stipulating numerous and significantly higher taxes on banking revenues," Chief Executive Jonathan Alles said.
"Notwithstanding, we stay positive and committed on continuing our efforts to raise the bar."
HNB said it was applying SLFRS 9 during the quarter under an optional treatment allowed under the current standard 39. If SLFRS 39 was applied loan loss charges could rise 35 to 45 percent, net assets could fall 3 to 5 percent and the capital adequacy ratio by 50 to 60 basis points.
Fee and commission income grew 11 percent to 2.45 billion rupees.
Trading losses were 277 million rupees, reversing from gains of 537 million a year earlier, with a falling rupee hitting the bank's forex swaps.
Net insurance premium grew 18 percent to 1.76 billion rupees. (Colombo/May15/2018- Update I)