Sri Lanka’s Pan Asia bank profits grow in Sept with lower bad loan provisions

ECONOMYNEXT- Net profits at Sri Lanka’s Pan Asia Banking Corporation (PABC) for the September quarter grew 4 percent from a year earlier to 270 million rupees due to lower bad loan provisioning, interim financials showed.

The bank posted 0.61 rupees in earnings per share in the September quarter, and 2.31 rupees per share for the first nine months of the year. PABC closed trading on Tuesday at 12.90 rupees a share.

Interest income for the September quarter was flat from a year earlier at 4.8 billion rupees, while interest expenses fell 2 percent to 3.16 billion rupees, leading to net interest income accelerating to 1.69 billion rupees.

An interest rate cap had been in place on deposits at banks during the most of the quarter, and was removed on September 24, helping reduce fund costs for banks.

Net fee and commission expenses at PABC grew 3 percent to 416 million rupees while net gains from trading were up 11 percent to 141.6 million rupees.

Provisioning for bad loans fell 42.6 percent to 335.5 million rupees, with a fallin individual provisioning and a growth in collective provisioning, contributing the most to net profits.

The bank in an earnings release said it improved both credit monitoring and loan underwriting standards.

PABC’s loan book fell 1 percent to 107.1 billion rupees at end-September from end-December, while deposit fell 1 percent to 117.4 million rupees.

Bad loans were up to 6.56 percent from 5.44 percent nine months ago.

PABC’s core capital to risk-weighted assets ratio grew to 12.25 percent from 11.51 percent, well above the regulatory requirement of 8.5 percent.

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The total capital adequacy ratio grew to 13.68 percent from 13.32 percent against a minimum 12.5 percent.

Taxes on financial services grew 76 percent to 267.2 million rupees due to the new Debt Repayment Levy, hitting the bank profits in the September quarter.

Return on assets for the quarter fell to 1.10 percent in September from 1.28 percent nine months ago, while return on equity fell to 11.60 percent from 13.73 percent. (Colombo/Nov06/2019)

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