Financial Times

HNB group 1Q pre-tax profits up 60 pct
The Hatton National Bank group delivered "exceptional" results for the first quarter with pre-tax profits increasing by 60 percent to Rs. 339 million from the same period last year with all the subsidiary companies contributing substantially towards the performance, a bank statement said.

First quarter after-tax profits at Hatton National Bank shot up 37 percent to Rs 248 million over the same period in what the bank called an "impressive" come back.

"The management team identified a set of challenges facing the bank and formulated key strategies last year designed to unlock the potential of the stock," HNB's CEO Rajendra Theagarajah said.

"Continued focus on implementing these strategies has contributed towards delivering exceptional performance during the first quarter of 2005." He attributed the performance to "rigorous expense management, recoveries of Non Performing Loans, diversification of income streams, and improved productivity along with a 27 percent increase in Net Interest Income.

During the first quarter of 2005, operating expenses of the bank recorded only a modest growth of six percent, including the Premises and Establishment costs which reflected an increase of just one percent.

"The 37 percent growth in post-tax profits mentioned above has been achieved with a growth in assets of just two percent, which clearly demonstrates management focus on managing HNB's balance sheet growth and increasing the asset productivity," the statement said.

"Similar productivity gains have been realized in the contingent liability/commitments, which saw a reduction of 11 percent." The buoyant stock market which has seen the ASPI rising to an all time high has given rise to HNB Stock Brokers Limited recording a Rs. 15 million net profit.

The bank's property development subsidiary recorded its first ever profit as a result of effective cost management and increased revenue from non-group tenants. Theagarajah said that on the retail banking side, HNB is continuing with various measures taken to take advantage of a 'card led' growth strategy.

Key initiatives in place include the launch of HNB's own payment gateway which will facilitate web based payments, 24 x 7 banking which will enhance the existing electronic banking delivery capability and enhancement of the ATM network.

HNB's voting share closed at Rs 67 on Tuesday, May 3, reflecting an 18 percent increase over closing levels as at end-2004.

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