HNB net profit up 26.3% to Rs 4.9 billion for 9 months
View(s):Hatton National Bank (HNB) saw its net profit surging 26.3 per cent to Rs 4,917.3 million during the first nine months of this (calendar) year.
Commenting on the results, a Softlogic Equity Research report noted that:
“The earnings during the third quarter grew 21.4 per cent year on year (YoY) to Rs 1,676.4 million with net income showing a 20.2 per cent YoY increase. The Net Interest Income (NII) climbed 26 per cent YoY during 3Q2012 with the Net Interest Margin (NIM) remaining steady at 4.91 per cent, whilst the Non Interest Income also grew 7.2 per cent YoY.”
The provision cost surged 293.7 per cent YoY amidst the bank’s effort in increasing its provision cover, whilst the operating expenditure growth was limited to six per cent YoY during this quarter (QoQ), it said. It also added that supported by steadying macro-economic interest rates, HNB’s NIM continued its stabilization pace reading 4.91 per cent during the quarter under review (from a 4.68 per cent as of end 2011). “The bank’s NII registered a growth of 26% YoY to Rs 5.4 billion, despite remaining flat on a quarter on quarter basis.”
The bank’s total interest income during 3Q2012 recorded a growth of 44.8 per cent YoY and 7.2 per cent QoQ, the report added. The interest income on loans and advances hiked 37 per cent YoY and 5.5 per cent QoQ with HNB’s net loans having expanded by 14.3 per cent year to date (YTD) to Rs 292.2 billion. HNB’s income on other interest earnings assets is growing 94 per cent YoY and 15.4 per cent QoQ as the bank’s investments in government securities held to maturity rose 21.7 per cent YoY and 17.4 per cent QoQ to Rs 80.5 billion during the third quarter in a high interest rate environment.
HNB’s total interest expenses increased at a higher pace at 63.2 per cent YoY and 13.4 per cent QoQ, the report said, adding that the interest expenses on deposits recorded a growth of 65.3 per cent YoY with its total deposit base having grown 12.4 per cent YTD to Rs 323.3 billion.
HNB continues to enhance its provision cover with loan loss provisions swell 293.7 per cent YoY to Rs 490.7 million during the third quarter, the report noted. “HNB’s provisions for bad and doubtful debts and loans written off hiked to Rs 490.7 million compared with a reversal of Rs 253.4 million during the comparative quarter.” Consequently, the provision expense during the first nine months increased to Rs1.1 billion (against a reversal of Rs 406.1 million during the same period last year, the report added. it said that this surge is primarily owing to HNB’s effort to increase its provision cover from current below average levels (HNB’s provision cover currently stands at around 44 per cent compared with an industry average of about 50 per cent).
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