ECONOMYNEXT – Sri Lanka’s listed Sanasa Development Bank reported a loss of 26.1 million rupees in the December 2018 quarter, down 113 percent from the previous year’s profit of 196.8 million rupees, on rising staff costs and bad loan provisioning, interim results shows.
Losses were 57 cents a share in the quarter. In the year to end December 2018, the bank reported earnings of 5.32 rupees a share on a profit of 259.6 million rupees, down 49 percent from a year earlier.
The share lasted traded at 60.70 rupees.
During the quarter, net interest income grew 38 percent from a year earlier to 1.2 billion rupees as interest income rose 24 percent to 3.5 billion rupees and interest costs increased a slower 17 percent to 2.3 billion rupees.
Net fee and commission income fell 58 percent to 32.8 million rupee while valuation gains from financial assets fell 82 percent from a year earlier to 34.8 million rupees.
Impairment costs including provisioning for bad loans surged 264 percent to 121.4 million rupees mostly
due to readjusting for new accounting rules.
Personnel expenses rose 51 percent to 571.3 million rupees.
During the year the bank expanded its staff by 10 percent to 1,504 and number of branched by three to 94.
The bank’s loan book expanded 16 percent from a year earlier to 77.5 billion rupees at end December 2018 while its deposit base grew a slower 13 percent to 67.5 million rupees.
Interest margin improved to 7.34 percent from 5.57 percent the previous year.
Gross non-performing loans rose to 2.57 percent of total loans, up from 2.07 percent a year ago.
Total shareholder funds, or net book value, grew 1 percent to 7.4 billion rupees while total assets rose 18 percent to 96.8 billion rupees.
Return on assets was down to 83 cents from 1.01 rupees a year earlier.
Tier I capital ratio fell to 10.91 percent at end December 2018, down from 12.42 percent a year earlier but above the regulatory minimum of 7.875 percent.
Total capital ratio was 12.46 percent, down from 14.59 percent a year ago but above the 11.875 percent minimum allowed.
On Tuesday, the bank announced plans to raise 10 million US dollars by issuing debentures to a consortium comprising Stichting Fondsbeheer DGGF Lokaal MKB and Triple Jump who will invest in the Sri Lankan bank on behalf of the Netherlands government.
The bank has also entered into an agreement to include unlisted subordinated five-year debentures for 3.5 billion rupees to bolster its capital under Basel III guidelines.
"The capital enhancement along with the loan proceeds raised by the bank will ensure that the bank will be geared to pursue loan book growth whilst maintaining healthy capital adequacy levels…and improving the profitability of the bank," it said in a letter to the Colombo Stock Exchange. (COLOMBO, 29 March, 2019)