Sampath Bank’s Net Interest Income up; decline in profit
View(s):Sampath Bank last week reported a net interest income of Rs.19.8 billion for 1H 2019 reflecting a growth of 12.2 per cent over the figure reported in 1H 2018, strong results given the challenging economic environment throughout the period under review.
Operating profit before impairment charges and taxes for the period grew by 4.6 per cent over the corresponding period in 2018. However, profit before taxes recorded a decline of 33.7 per cent. Impairment charges for the period increased owing to higher non-performing loans reported during the period. Meanwhile, volatile interest rates, currency uncertainty and substantially higher taxes such as the debt repayment levy continued to undermine the bank’s profit growth. The economic slowdown and the recent Easter Sunday terror attacks which affected many key industries also had a negative impact on the profit growth of the bank, the banking group said in a media statement.
The bank recorded a Profit Before Tax (PBT) of Rs.5.8 billion and a Profit After tax (PAT) of Rs.4.1 billion. The Sampath Bank Group reported a PBT and PAT of Rs.5.9 billion and Rs.4.2 billion, respectively.
Net Interest Income (NII), which is the main source of income representing almost 76 per cent of the total operating income of the Bank, recorded an increase of Rs.2.1 billion (12.2 per cent) during the period under review.
The above achievement was made possible due to marginal growth in the bank’s fund base, timely re-pricing of asset and liability products and other fund management strategies adopted by the bank.
Operating expenses of the bank which stood at Rs.9.5 billion during 1H 2018, increased to Rs.10.1 billion during the period under review, reflecting a YoY increase of 6.7 per cent. This increase was mainly due to higher personnel expenses triggered by annual salary increments. Other overhead expenses too increased slightly due to general price hikes.
While the general economic slowdown continued to dampen the general business climate in the country, the recent Easter Sunday terror attack had a catastrophic impact on the financial performance of many key sectors of the economy. Consequently, non-performing advances of all banks including Sampath Bank further increased in 1H 2019. As a result, Sampath Bank’s gross NPA ratio increased to 5.66 per cent as at June 30, 2019 from 3.69 per cent reported as at end December 2018.
As a result of the increase in non-performing advances, the impairment charge of individually significant customers increased to Rs.2.5 billion in 1H 2019 from Rs.1.7 billion in the corresponding period for 2018, the statement said.