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Sri Lanka HNB group March net up 57-pct helped by forex profits, tax cuts

ECONOMYNEXT – Sri Lanka’s Hatton National Bank, which controls an insurer, said profits grew 57 percent to 3.0 billion rupees in the March 2020 quarter from a year earlier, helped by forex profits and tax cuts despite loans loss provisions,

The group reported earnings of 6.09 rupees for the quarter.

Interest income fell 6 percent to 29.7 billion rupees in the March quarter, interest expenses fell at a slower 3 percent to 16.4 billion rupees, shrinking net interest income 9 percent to 13.3 billion rupees.

At group levels loans and advances grew 2 percent to 781 billion rupees from December to March 2020.

HNB provided 4.6 billion rupees for loan loss provisions at group level up 1 percent from a year earlier.

At standalone bank level provisions were 4.66 billion rupees up 13 percent from a year earlier.

.”. [G]iven the implications of COVID – 19, the Bank has incorporated initial adjustments based on the limited information available in line with the guidelines issued by CA Sri Lanka and has made an impairment provision for 4.7 billion rupees for the first quarter of 2020″ HNB said.

Gross non-performing loan ratio was unchanged at 5.9 percent.

Accumulated stage 03 impairments rose to 27.0 billion rupees from 24.0 billion in December.

Net fee and commission income fell 12 percent to 2.2 billion rupees.

“Relatively lower trade and economic activity even prior to the COVID – 19 pandemic resulted in fee income being marginally lower,” the banks said.

“Nevertheless, revenue from digital channels continued to be encouraging.”

Sri Lanka’s rupee fell in March as the central printed large volumes of money under its call-money-rate-targeting-with-excess-liquidity and did not defend the peg as it broke under excess liquidity and credit. March credit to both private sector and the government spiked, data showed.

The group reported other operating income of 1.9 billion rupees against a loss of 1.1 billion rupees last year as the rupee fell.

There were no charges for a debt repayment levy or nation building tax after the new administration announced tax cuts in January, which are yet to be passed in parliament.

In March 2019 the bank charged 583 million rupees for a debt repayment levy and 143 million rupees for nation building tax.

Group deposits grew 4 percent to 865 billion rupees during the quarter.

Shareholders grew 2 percent to 148 billion rupees.

Tier I capital adequacy fell to 14.08 percent from 14.7 percent at group level during the quarter. At bank level Tier I adequacy fell to 13.85 percent from 14.57 percent.

Gross assets grew 2 percent to 1,219 billion rupees. (Colombo/Mar20/2020)