People’s Bank today announced the results for its quarter ended March 31, 2023 reporting total consolidated operating income and pre-tax profit amounting to LKR 24.0 billion and LKR 7.2 billion, respectively (Q1-2022: LKR 42.6 billion and LKR 11.0 billion).
Similar to 2022, the quarter continued to be characterized by higher interest costs; due to the high interest rate environment which prevailed. This saw consolidated net interest income dip by 49.7% to LKR 15.3 billion during the period relative to Q1-22. This, in part, also reflected the Bank efforts to defer re-pricing of some of its loans to its more sensitive customer segments. Consolidated net fees & commission income amounted to LKR 4.5 billion which, excluding one off items during Q1-22, represented over a 40.0% growth on a like for like basis.
Reflecting inflation pushed cost pressures, much of which originated in the period after Q1-22, saw consolidated total operating expenses rise by 10.1% to reach LKR 14.4 billion (Q1-22: LKR 13.1 billion). This compared well with the industry and, in part, also reflected Group efforts for greater cost control at every instance so reasonably possible.
Total consolidated customers deposits grew to reach LKR 2,513.1 billion - i.e., by 2.6%, whilst consolidated net loans contracted by 4.2% to LKR 1,835.1 billion. The dip in net loans reflected a conscious effort on part of the Bank and the Group to control lending more so in a yet contracting macro-economic context. Total consolidated assets stood at LKR 3,072.2 billion at period end (end 2022: LKR 3,133.1 billion).
The Bank’s Tier I and Total Capital Adequacy Ratios were 11.8% and 16.2%, respectively at March 31, 2023 (end 2022: 11.9% and 16.3%) whilst, on a consolidated basis, it was 13.0% and 16.9%, respectively (end 2022: 13.3% and 17.2%). The Bank’s solvency levels remain sound ultimately reflecting efforts made since the onset of Basel III on July 1, 2017. Further efforts to bolster its regulatory capital, including for the purposes of additional contingency, is currently ongoing. In addition, the Bank successfully met all key regulatory measures during the said period.
Commenting on the results of the Bank and the Group, the Chairman of People’s Bank, Mr. Sujeewa Rajapakse, stated that: “Whilst the sector has, and continues to reel with many headwinds over the last several years. our first quarter results remains testimony to our continued strength and resilience, and adaptability even in the most adverse set of circumstances. Over the last several years, the Bank has successfully met the needs of its diverse stakeholders, leading from the front in many instances so to ensure the country is first prioritized, customer interest are safeguarded, government endeavors are supported whilst, at the same time, the Bank’s commercial interests are also met. Our top line growth during the quarter attest to the growth of our core banking operations whilst the high interest rate environment which prevailed has naturally led to the inevitable earnings pressure as seen throughout the industry. The quarter was however witness to several accomplishments from an Institutional standpoint both from a quantitative and qualitative front. This included, amongst other, our ability to successfully drive identified strategic growth areas, ensure sustained improvements in liquidity both from a rupee and foreign currency standpoint and instill further improvements from a risk management perspective. In addition, our digital investments continues to bear fruit, which augurs well for the Bank’s future growth prospects!
Looking ahead, with several positive developments seen on a macro-economic front including those stemming from the IMF’s Extended Fund Facility, we look forward to the future with a great degree of optimism. As we have done so over the last several years, we reaffirm our unwavering commitment to play our role to safeguard national interest and those of our stakeholders. I take the opportunity to thank our loyal customers for their continued trust and confidence in the Institution!”
Commenting on the results, the Bank’s Chief Executive Officer/ General Manager (Acting) Mr. Clive Fonseka, stated that: “Despite the many pressures, including those unique to a State-Owned Institution, we have continued to make noteworthy progress on several fronts and have addressed some of the most pressing matters within a short span of time. Our primary focus has, and continues to be, in further bolstering our liquidity, driving key areas of strategic importance, and managing our asset quality whilst supporting our customers navigate through these challenging times. We are currently also taking early steps to bolster our regulatory capital from current levels. The success of our delivery remains ultimately best reflected in the sustained improvements shown across several key performance indicators.
Relating to the recent news being circulated in select social media platforms on non-performing loan write-offs - I seek to confirm that there have been no such write offs. Our usual due process for recovering such loans are currently in process.
He further stated that: “The foundation of People’s Bank’s success primarily rests with our staff and that of our loyal customers. While the road ahead is likely to be filled with many more challenges, we look forward to facing them with confidence and vigor as we have done so over the last several years!