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Sri Lanka’s Sampath Bank pays big dividend after D-SIB rule change, net up in Dec

ECONOMYNEXT- Profits of Sampath Bank, the third largest listed lender in Sri Lanka, quarter grew 29.4 percent to 4.9 billion rupees from a year helped by a one-off tax reversal, and the bank also declared an 11.75 rupee dividend for 2019.

The group reported 12.84 rupees in earnings per share for the quarter, down 0.6 percent due to an increase in outstanding shares after a rights issue.

For the year ended December, Sampath Bank earned 34.36 rupees in earnings per share on profits of 11.67 billion rupees, down 7.4 percent, the interim financials showed.

Sampath stock was up 6.60 rupees up at 167.20 rupees a share Friday morning after the firm announced an 11.75 rupee dividend.

Sampath Bank had to raise 12.1 billion rupees in Tier 1 capital during the year, but gave higher dividends as the bank’s capital requirements fell after the central bank reformed the domestic systemic bank (D-SIB) rules in December, an official said.

Gross income at the Sampath group for the December quarter fell 4.9 percent to 31.5 billion rupees from a year earlier.

Interest income fell 2.2 percent to 27.4 billion rupees, while interest expenses grew at a higher 4.2 percent to 15.67 billion rupees, but the bank grew interest income 0.7 percent to 11.7 billion rupees.

The group loan book expanded 6.1 percent to 719 billion rupees over the year to December 31.

Provisioning for bad loans fell 21.1 percent to 2.4 billion rupees.

Deposits grew 4.4 percent to 730.2 billion rupees.

The non-peforming loan ratio rose to to 6.37 percent from 3.69 percent a year earlier.

Net fee and commission income grew 4.9 percent to 2.8 billion rupees. The group made 494.6 million rupees in gains from trading, from a 838.7 million rupee loss a year earlier.

Profits before income tax were down 7.7 percent to 5.5 billion rupees, and the tax expense was down 72.6 percent to 594.5 million rupees.

A tax reversal was recorded on interest from Sri Lanka Development Bonds with effect from April 1, 2018, an official said.

The 2017 Inland Revenue Act’s English copy had only included sovereign bonds as exempt from tax income, causing uncertainty, and the Inland Revenue Department on February 12, 2020 cleared the issue through a circular to exempt SLDBs from tax as well, causing the reversal.

Group tier 1 capital adequacy ratio grew to 14.05 percent from 12.12 percent against a minimum requirement of 8.5 percent.

Total capital adequacy grew to 17.75 percent from 15.69 percent percent against a required 12.5 percent.

The group balance sheet grew 5.4 percent to 999.3 billion rupees.

Net assets at the group level grew 23.8 percent to 111.5 billion rupees. At the stand-alone bank level, net assets grew 24.4 percent to 105 billion rupees.

(Colombo/Feb14/2020- Updated at 12:41- Capital adequacy ratios were reported as falls, which have been corrected.)

Reported by Chandeepa Wettasinghe

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