HNB’s post tax profit eases by 7% to Rs. 7 billion in 2013
View(s):Hatton National Bank (HNB) profit before VAT and tax grew by 5 per cent to Rs. 11.7 billion while net profit after tax eased by 7 per cent to Rs. 7 billion in 2013.
In a media statement, the bank said 2013 was one of the most challenging years faced by the financial services industry with demand for credit remaining low, margins coming under pressure, asset quality continuing to deteriorate and declining gold pricesaffecting the pawning business. But it pointed out that HNB successfully weathered the challenges as “demonstrated by its credit growth of 16.8 per cent which is well over the industry growth of 8.8 per cent, above industry interest margins,Non Performing Assets( NPA) ratio of 3.6 per cent compared to 5.6 per cent for the banking sector and pawning NPA of 1.1 per cent for the bank against the industry average of 12.7 per cent”.
Commenting on the performance, Dr. Ranee Jayamaha, HNB Chairperson said that “year 2013 has been one in which our sustainable business model and the collective skills of our team have been put to test on many fronts”.
Interest income which is by far the largest contributor to the bank’s total revenue grew by 18 per cent to Rs. 55.7 billion. While the high interest rates witnessed during major part of 2013 also contributed towards the growth in interest income, the interest write-offs from pawning advances had an adverse impact. Interest expenses increased at a faster pace of 24 per cent during the year, thereby compressing margins. The growth of 13 per cent, in deposits coupled with higher interest rates resulted in the surge in interest cost during the year.
Total operating income of the bank stood at Rs. 28.6 billion, up 9 per cent over 2012.
Jonathan Alles, Managing Director / CEO of HNB, noted that “during 2013 we crossed the Rs 500 billion mark in assets and achieved a profit before tax of Rs. 10 billion notwithstanding the challenging conditions experienced. In 2013, HNB embarked on a journey united in purpose as one team, towards being the best in class service provider. We made significant investments in technology, enhanced our service delivery through electronic channels and commenced a Business process re- engineering initiative to drive sales by optimising the business operating model. Going forward, the Bank will leverage on these initiatives to reach greater heights”.