Under-fire HNB records Rs. 13.4 bln in pre-tax profit in 1H2017
View(s):The HNB banking group, which recently went through a ‘traumatic’ couple of weeks after confidential customer data was accidentally released, this week said its first half 2017 post tax results were Rs.7.5 billion, up by 7.5 per cent from the same 2016 period.
Group pre-tax profit was Rs. 13.4 billion, an increase of 13.8 per cent from the 2016 first half period, the bank said in a media release.
“The sound performance was driven by the core banking business with interest income, rising by 38.8 per cent to Rs. 46.5 billion. This was supported by a 19.3 per cent year on year growth in advances,” the release said, making no references to the recent troubles of the bank.
High network customers of the bank were livid after some of their account details were released in a promotional mailer sent to the bank’s priority customers on July 12. HNB apologised for this inadvertent release of information while receiving a Central Bank reprimand. The banking regulator said it was probing the incident.
This crisis was precipitated by challenges in court by powerful shareholders over a rights issues and plans to issue shares to the Asian Development Bank (ADB). Eventually the matter was sorted out and the rights issue took place. For many years, powerful businessman Harry Jayawardena has eyed control of the bank but has been restricted by law. For instance, while his companies collectively hold 17.90 per cent of the voting shares of the bank, according to the HNB 2016 annual report, voting rights are limited to 10 per cent of the total voting rights of the bank (with effect from 15th March 2012 as the voting rights in excess of such percentage is deemed invalid from that date). Recently Mr. Jayewardene sought to strengthen his ‘hand’ in the bank, with his nominee Damien Fernando stepping down and replaced by another loyalist but a more powerful personality, Dinesh Weerakkody.
The media release said the extreme weather conditions coupled with the high interest rates saw a marginal deterioration in asset quality in line with the industry. As at end of 1H 2017, HNB’s NPA ratio stood at 2.2 per cent and continued to be better than the average of 2.7 per cent recorded by the industry.
Commenting on the performance, MD/CEO of HNB Jonathan Alles was quoted as saying that “HNB has continued to record stable and sustainable overall performance in the first half of 2017 and we are truly grateful to all our valued stakeholders for the continuous trust and confidence placed in us”.
The bank’s loan book expanded to Rs. 627 billion, representing a growth exceeding Rs. 100 billion over the previous 12-month period.