ECONOMYNEXT – Profits at Sri Lanka’s Hatton National Bank grew 17 percent from a year earlier to 4.8 billion rupees in the September 2018 quarter, on better interest margins and forex gains due to rupee depreciation, interim accounts showed.
Earnings were 9.68 rupees a share in the quarter. In the nine months to end September, earnings were 28.25 rupees a share on a profit of 13.8 billion rupees, up 23 percent from a year earlier, interim statements filed with the Colombo Stock Exchange showed.
Hatton National Bank ended 20 cents lower at 215 rupees on Wednesday.
"The bank’s initiatives in centralization and digitalization has yielded a continuous improvement in HNB’s Cost-to-Income ratio, which improved to 36.9 percent for the nine months ending September 2018, exceeding that recorded during the corresponding period of 2017 by 360 basis points," a statement from the bank said.
During the quarter, net interest income grew 15 percent to 13.7 billion rupees as interest income grew 10 percent to 29.5 billion rupees and interest expenses grew a slower 6 percent to 15.9 billion rupees.
Net fee and commission income grew 10 percent to 2.5 billion rupees.
The banking group made a trading profit of 189.3 million rupees in the quarter, up from a loss of 1.8 billion rupees a year earlier due to a revaluation of currency swaps due to rupee depreciation and low volumes compared to the previous year, the bank said.
Bad loans provisioning increased 87.6 percent to 1.8 billion rupees.
Non-performing loans were 3.1 percent of total loans at end September, up from 2.28 percent nine months earlier, "reflecting macro and industry conditions which have precipitated delays across the industry in collections," the bank told shareholders.
Personnel expenses rose 20 percent to 3 billion rupees and other expenses increased 17 percent to 3.1 billion rupees.
Premium income from a subsidiary insurance company increased 20 percent to 1.9 billion rupees while benefits, claims and underwriting expenses rose 17 percent to 1.8 billion rupees.
The banking group’s loan book expanded 12 percent from nine months earlier to 736.7 billion rupees at end September while deposits grew 10 percent to 776.3 billion rupees.
Over the nine months period, the bank’s interest margin has improved to 4.58 percent, up slightly from 4.25 percent.
Basel III Tier I Capital was 13.25 percent at end September, down from 13.68 percent nine months earlier but above the regulatory minimum of 8.875 percent.
Total Capital adequacy was at 15.67 percent, above the regulatory minimum of 12.875 percent but down from 16.72 percent nine months earlier. (COLOMBO, 15 November 2018)