HNB Group posts Rs 3.3 bn PAT for Q1 2020

Hatton National Bank PLC (HNB) has posted a Profit After Tax (PAT) of Rs. 2.6 billion for Q1 2020, representing an increase of Rs. 607 million over Q1 2019.

In a media release issued by the company, Dinesh Weerakkody, Chairman of HNB said, “2019 was extremely challenging for the entire banking sector and we welcomed the year 2020 with great optimism. The first two and half months of 2020 didn’t disappoint us. The COVID-19 pandemic which has engulfed the globe, however, has been unprecedented in its impact across the economic spectrum. With almost all major economies significantly impacted, with resultant lockdowns leading to severe disruption in international trade and travel and Sri Lanka appearing to be quite successful in managing the situation at the moment, the forward challenges though to our nation seem quite significant with the economy expected to contract.”

The interest income of the bank dropped by 7.2 per cent YoY to Rs. 27.2 billion, due to the drop in AWPLR by nearly 300 bps over the past 12 months up to March 2020. 

The rupee depreciated significantly since mid-March triggered by COVID-19 recording a deprecation of over 4 per cent during the first quarter. This was reflected in the net other operating income of Rs 1.9 billion against the Rs. 1.1 billion loss recorded in Q1 2019.

In Q1 2019, the bank made substantial impairment provisions of Rs 4.1 billion with asset quality deteriorating industry wide. Similarly, given the implications of COVID-19, the bank has incorporated initial adjustments based on the limited information available in line with the guidelines issued by CA Sri Lanka and has made an impairment provision of Rs.4.7 billion for the first quarter of 2020.

Operating profit before VAT and taxes declined by 13.5 per cent to Rs. 4.2 billion compared to Rs.4.9 billion in the corresponding period of 2019. Income taxes were also much lower as NBT and DRL payments did not qualify for relief in income tax charge assessment for Q1 2019 and resulted in a PAT of Rs. 2.6 billion for the period compared to Rs.2 billion in Q1 2019, the release said.

Commenting on how HNB responded to the COVID-19 situation, Bank Managing Director Jonathan Alles said, “As an essential service, we continue to operate in curfew and non-curfew areas as per the guidelines issued by the Central Bank of Sri Lanka. Health and safety of our staff, customers and all our stakeholders is our utmost priority and we continue to provide maximum safeguard measures as prescribed by the authorities. The outbreak has led to the emergence of a ‘New Norm’ of operating.”