May 16, Colombo: Sampath Bank reported a net interest income of Rs. 10.2 billion for Q1 2019 reflecting a noteworthy growth of 23.2% over the figure reported in Q1 2018, a significant achievement given the challenging economic conditions that prevailed throughout the period.
The bank recorded a profit after tax of Rs. 2.2 billion, a negative growth over the corresponding period in 2018, due to several factors including higher impairment provisions, volatile interest rates, currency uncertainty and higher taxes including a Debt Repayment Levy all of which worked against growth in Q1 2019. Over and above this, the economic slowdown also had a domino effect causing a negative impact on the bank's business expansion strategies.
Meanwhile the Sampath Bank Group reported a Group profit after tax of Rs. 2.1 billion.
In order to improve the comparability and the consistency of the Group's Financial Statements, the bank adjusted comparative figures disclosed in Q1 2018 related to collective impairment provision based on Sri Lanka Accounting Standard - SLFRS 9 (Financial Instruments).
Net Interest Income (NII), which is the main source of income representing more than 79% of the bank's total operating income, recorded a significant increase of Rs. 1.9 billion (23.2%) in Q1 2019 in comparison to Q1 2018. Accordingly, the bank recorded a NII of Rs.10.2 billion in Q1 2019, as against Rs. 8.3 billion recorded for Q1 2018.
The above achievement was made possible due to timely re-pricing of asset and liability products and other fund management strategies adopted by the bank. The decision by the regulator to reduce the SRR from 7.5% to 6.0% with effect from 16th November 2018 followed by a further reduction to 5% with effect from 1st March 2019 also had a positive impact on NII. The bank managed to improve its NIM from 4.41% as at 31st December 2018 to 4.54% in Q1 2019.
Net fee and commission income, which largely comprises of credit, trade, card and electronic channel related fees recorded Rs. 2.3 billion in the quarter under review, a marginal decline over the figure reported in Q1 2018. The decline was kept to a minimum due to the strong market uptake for innovative value additions offered through electronic channels as well as appropriate action to expand credit card operations.
The net gain from financial investments recorded a marginal growth of 1.4%, due to increases in dividend income earned from financial assets. The Sri Lankan rupee, which depreciated against the US dollar during Q1 2018 by Rs. 2.00 and showed an appreciation of Rs. 7.00 in Q1 2019, had a significant impact on the bank's total exchange income for Q1 2019, which declined by Rs. 858 million for the quarter.