Sampath eyes finance firm through subsidiary, Siyapatha Finance
Sampath Bank (Sampath) is currently evaluating some finance company proposals to acquire one through its subsidiary Siyapatha Finance, a top official said.
“We’re closely negotiating with a few finance companies. We want to acquire one company through Siyapatha Finance,” Aravinda Perera, CEO Sampath Bank told the Business Times. He said this is in line with the financial sector consolidation that’s ongoing.
Aravinda Perera
While stating that ‘mergers’ (in the financial sector) won’t be ‘easy’, he said a less number of competitors in the industry is welcome.
Meanwhile Sampath Bank has made an application to the government of Myanmar to set up a representative office there. “We are awaiting a decision,” Mr. Perera said.
He added that impairment reversal against the pawning portfolio led to a reduction in impairment charges in 2Q14. A pawning impairment reversal of Rs. 921.5 million saw collective impairment reduce in 2Q14. “Sampath was able to increase its earnings by 138.8 per cent year on year (YoY) to Rs. 543 million primarily due to the pawning impairment reversal of Rs. 921.5 million (which managed to offset the negative impact from interest loss to a certain extent) and strong growth in non-funded income (16.8 per cent YoY in 2Q14),” Mr. Perera said.
The reasons for pawning impairment reversals are multifaceted where the reversals were dependent on the stable gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier. The impairment reversal against the pawning portfolio for the half year amounted to Rs 1,736.3 million, as against a charge of Rs.989.5 million in the 1H 2013. The bank’s pawning exposure stood at 12.8 per cent by end of 2Q14.
Sampath recorded a profit after tax growth of 67.5 per cent during the first half of 2014 and the post –tax profit of the Bank during the 1H 2014 was Rs 2.68 billion compared to Rs 1.6 billion, achieved in the corresponding period in 2013.
Despite slow credit demand, continuous declining in exposure to pawning advances, Sampath managed to increase its net loan book by 1.1 per cent quarter on quarter (QoQ) at Rs. 259.6 billion. Operating expenses increased on account of the 11.5 per cent YoY increase in personal expenses to Rs. 368.8 million which resulted from expanding staff cadre (120 new recruitments during the quarter) and salary increments.
Bank’s gross non-performing ratio (NPL) ratio decreased to 2.6 per cent while net NPL increased to 0.8 per cent. The NPL rate of the bank as at June 14 is 2.6 per cent. Despite lower deposit rates bank managed to grow its deposit base by 2.4 per cent QoQ and 20.1 per cent YoY to Rs. 319.2 billion in 2Q14.
Sampath Bank has focussed on enhancing customer experiences through improved service quality effectively combining human resources and technological innovation, Mr. Perera said. “We have proved resilient to external shocks through effective risk management processes and our ability to respond to changes in our operating environment.”
Accolade
Sampath Bank was selected as the “Best Bank in Sri Lanka – 2014″ by the global Business Magazine “The Euromoney”, for the consecutive second year. “This award shows that we managed to overcome a challenging year,” Mr. Perera said. At the National HRM Conference 2014, Sampath Bank won ‘Talent Management Award’, which is presented to organizations based on overall excellence, demonstrated in all spheres of HR. Sampath Bank was awarded with the prestigious Best Community Programme Leadership Award at the Asia Responsible Business Excellence Awards – 2014.