Sampath Bank’s 1Q2020 operating profit down, but post-tax profit rises
View(s):Operating profit for the first quarter ending March 2020 at Sampath Bank fell by 10.8 per cent but there was a moderate growth in post-tax profit (PAT), the bank announced on Wednesday in releasing its first quarter 2020 results.
Due to the unsettled economic environment, the prospects for Sri Lanka’s banking sector in 2020 remains bleak. While government-mandated credit concessions are expected to decrease the impact on individuals and businesses, it would impact on liquidity, revenue growth, credit growth and credit quality of all banks in the country. Further, profitability will be severely compromised.
The decline in operating profit was due to the reasons mentioned above. However the bank’s PAT of Rs 2.5 billion for the same quarter reflected a growth of 15.7 per cent over the corresponding period in 2019. PAT growth was attributed to two factors — higher exchange income due to the depreciation of the Sri Lankan rupee against the US dollar by Rs 7.90 during the quarter and tax concessions received owing to the abolition of Debt Repayment Levy and NBT on financial services.
“The challenges brought by COVID – 19 pandemic and the recession brought on by the terrorist attack in April 2019 has lead the period under review to be pressurized by some unique challenges that were not seen in Q1 2019. Therefore, it is important to note that comparing the results of Q1 2020 with the corresponding period in 2019 may not be realistic,” the bank said.
The bank said it continued to demonstrate its commitment to offer the best possible service to its customers across the country by maintaining all essential banking services without interruption amidst curfew restrictions imposed during the COVID-19 lockdown. Sampath Bank’s 429 ATMs, 448 Deposit Kiosk Machines (DKMs) and all 229 branches when permitted remained fully operational during the entire period of lockdown, enabling customers to perform routine transactions with the bank.
The bank said it will adopt a broad-based approach that includes sound strategic planning coupled with effective management decisions to overcome the prevailing challenges. “The management team of the bank will remain vigilant in managing assets and liabilities and meeting all contractual obligations of the bank while ensuring delivery of all concessions to customers and other stakeholders. All ongoing projects and recent proposals will be re-evaluated with a view to redirecting expenditure only to essential core business requirements.
At the same time, the bank will cautiously explore new business opportunities that may present itself from time to time. In this regard the bank will seek to upgrade the skills of employees and invest in technology where necessary in order to leverage on such opportunities successfully,” it said in the statement.