Nov 15, Colombo: Hatton National Bank PLC (HNB) continued its growth momentum to post a group Profit before VAT & NBT of Rs 20.7 Billion while the Profit Before Tax (PBT) and Profit After Tax (PAT) improved to Rs 16.8 Billion and Rs 11.8 Billion respectively for the first nine months of the year while group assets crossed Rs 1 trillion. PBT at Bank level surpassed Rs 15 Billion and PAT was recorded at Rs 10.9 Billion.
Interest income of the Bank grew by 33.5% year on year (yoy), supported by a 14.9% yoy growth in advances. The 14.9% yoy growth in current account and savings account (CASA) deposits to Rs 247.2 Billion, enabled to improve the net interest income of the Bank by 18.7% yoy to Rs 29.6 Billion.
The interest income was complimented by fee and commission income which grew by 20.4% yoy on a net basis, adding Rs 6.1 Billion to the Bank's topline. Credit card business, trade finance and guarantee commission continued to be key contributors towards this growth.
An increase in swap rates as well as the volume of swaps led to the 'trading loss' increasing to Rs 2.8 Billion during the first nine months of 2017 compared to the loss of Rs 1.3 Billion in the corresponding period of the previous year. However the corresponding increase from position revaluations contributed to a 29.5% rise in 'other operating income' to Rs 2.8 Billion from Rs 2.1 Billion in 2016.
The NPA ratio increased to 2.6% as at end of September 2017 while the total impairment charge for the period amounted to Rs 2.3 Billion.
The initiatives adopted in the recent years towards operational excellence continued to bear fruit with HNB being able to contain the increase in total operating expenses to 7.5% yoy. Thus, the cost to income ratio for the nine months ended September 2017 improved by over 300 bps to 40.5% from the level reported for the corresponding period in 2016.
The upward revision in VAT to 15% from 11% in 2016, led to an increase of 29.6% in VAT & NBT charges for the period. This resulted in the Bank's PBT growth being constrained to 6.3%, leading to a PBT of Rs 15.4 Billion for the period. The Bank's total tax charge for the period (including VAT & NBT) amounted to Rs 8.2 Billion with the effective tax rate being 43% for the nine months ended September 2017.
Commenting on the performance, MD/CEO of HNB Mr. Jonathan Alles stated that "HNB continues to deliver sound performance, notwithstanding the challenging conditions. We are humbled by the prestigious local and international accolades and are truly grateful to our stakeholders for their unstinted patronage". He added "we strongly believe that HNB is very well positioned to capture the growth opportunities as Sri Lanka envisions to be the hub in the Indian Ocean and we stay committed to enhance value to all our stakeholders in this journey".
The asset base of the Bank grew by 11% to Rs 953.3 Billion while net loans and advances reached Rs 625 Billion as at end of September 2017. HNB was successful in recording an impressive Rs 76.4 Billion growth in deposits during the period with the total deposits nearing Rs 700 Billion.
The rights issue which was concluded successfully during the third quarter of 2017 enabled the Bank to improve its Tier I and Total Capital Ratios to 12.91% and 16.42% respectively, significantly above the Basel III guidelines as set out by the Central Bank of Sri Lanka. The capital raised also resulted in ROE declining to 16.1%, while ROA was at 1.6% for the period.
All group companies contributed positively towards the group PBT of Rs 16.8 Billion and group PAT of Rs 11.8 Billion for the first nine months of the year. (Presss Release)