Sri Lanka’s Pan Asia Bank profits surge in Dec on bad loan recovery

ECONOMYNEXT- Net profits at Sri Lanka’s Pan Asia Banking Corporation Plc (PABC) grew 58 percent to 726.8 million rupees in the December quarter from a year earlier amid a rise in bad loan recovery and lower interest costs.

The bank reported earnings of 1.64 rupee per share. For the 12 months ended December 2019, the bank reported earnings of 3.96 rupees a share on total profits of 1.7 billion rupees, up 14 percent from a year ago. The PABC share closed at 12.20 rupees on Wednesday.

The bank in an earnings release statement said the December quarter profits were its highest ever.

Interest income for the quarter fell 3 percent to 4.9 billion rupees amid central bank price controls on loans.

However, interest expenses dropped 10 percent to three billion rupees on the bank’s efforts to slowdown deposits and ‘purge certain high cost time deposits’, leading to net interest income to grow 9 percent to 1.9 billion rupees.

PABC said it managed a 17.9 million rupee reversal on bad loan provisions from a 485.44 million rupee provisioning charge a year earlier, on close monitoring of overdue credit portfolios and strict recovery efforts.

The bank’s loan book grew 3 percent to 111.19 billion rupees, against the industry’s 5 percent.

Bad loans at end-December grew to 6.31 percent from 5.44 percent a year earlier, against an industry average of 4.7 percent at end-December.

Pan Asia Bank’s deposit base grew 3 percent to 122.5 billion rupees.

The bank’s asset base as at December 2019 fell one percent to 153 billion rupees on lower debt and other instrument holdings while net assets grew 19 percent to 13 billion rupees.

The bank reported a tier 1 capital ratio of 12.87 percent, up from 11.51 percent in 2018, standing above the minimum requirement of 8.5 percent.

The total capital ratio grew to 14.31 percent from 13.32 percent against the required rate of 12.5 percent.

Return on equity grew to 14.5 percent from 13.37 percent. Return on Assets also increased to 1.52 percent from 1.28 percent a year earlier.

“As most of our challenges are now behind us, I believe the prevailing low interest rates and tax rates and the expected policy and political stability would provide the much needed tailwind for the industry to march ahead with much vigor,” PABC Chief Executive Namal Tillekeratne said.
(Colombo/Feb19/2020)
Reported by Tania Madies and Edited by Chandeepa Wettasinghe