Continuing its robust growth momentum, Sampath Bank said yesterday it has achieved Rs. 8.5 b in Profit After Tax (PAT) within the first three quarters of 2017, up by an impressive 26.2% from Rs. 6.7 billion recorded for the comparative period in the previous year.
Profit Before Tax (PBT) too grew by31.9% YoY to reach Rs. 11.8 b for the nine months ended 30 September 2017, as against the Rs. 8.9 b reported for the corresponding period in the previous year.
The Sampath Bank Group, which comprises of the Bank and four fully-owned subsidiary companies, also posted a growth in PAT and PBT of 26.5% and 32.4% respectively for the nine months ended 30th September 2017.
Net Interest Income (NII), the main source of income of the Bank which accounts for more than 70% of the total operating income, recorded an increase of Rs. 4.3 b (26.9%) compared to the corresponding period in 2016. Accordingly, NII for the first three quarters of 2017 amounted to Rs. 20.5 b, as against Rs. 16.1 b recorded for the comparative period in the previous year.
The above achievement was made possible by the robust growth recorded in the Bank’s fund base, as indicated by 18.5% (annualised 24.7%) growth in deposits together with 17.2% (annualised 22.9%) growth in advances. The timely re-pricing of asset and liability products and other fund management strategies adopted by the Bank too played a pivotal role in achieving the aforesaid growth in NII.
Net fee and commission income, which largely comprises of credit, trade, card and electronic channel related fees, increased to Rs. 5.9 b during the period under review, as opposed to Rs. 4.7 b recorded during the corresponding period in 2016. The notable YoY growth of 24.8% is largely the result of strong growth recorded in advances, expansion of credit card operations and the success of innovative value additions, especially electronic channel offerings.
Other operating income too recorded a YoY increase of 34.8% for the period under review, led mainly by an increase in realised exchange income. Net gain from financial investments also grew by 34.0%, bolstered by an increase in dividend income earned from financial assets. Consequently, other operating income and net gain from financial investments for the first nine months of 2017 stood at Rs. 2.5 b, compared to Rs. 1.8 b reported for the corresponding period in 2016.
Net trading income, which stood at Rs. 291 m as at the reporting date, is a marginal decline (0.5%) from the figure reported in the corresponding period in 2016.
Operating expenses of the Bank, which stood at Rs. 11.3 b for the first three quarters of 2016, increased to Rs. 12.2 b during the period under review, reflecting a YoY increase of 8.4%. This increase was mainly due to higher personnel expenses triggered by salary increments. Other overheads for the period also increased, in part due to general price hikes and indirect tax increases. Notwithstanding these increases however, the Bank’s Cost to Income ratio excluding VAT and NBT on financial services declined significantly to 42.0% in the first three quarters of 2017 from 49.1% reported for the same period in 2016, a notable improvement of 710 basis points.
Impairment charges, which amounted to Rs. 2.1 b for the first nine months of 2017, witnessed an increase of Rs. 1.2 b from the Rs. 0.9 b tabled for the same period in 2016. This was largely due to higher provisions made against newly-identified doubtful customers as well as additional provisions made against already impaired customers leading to higher impairment provisions on individually significant loans. Consequently, the impairment charge on account of individually significant loans grew by Rs. 420 m during the period under review.
Meanwhile, the collective impairment charge increased by Rs. 726 m, predominantly due to the growth in the loan portfolio and the improvements made to the collective impairment models during the fourth quarter of 2016. The NPA ratio too has increased marginally from 1.61% in December 2016 to 1.74% in September 2017.
Notably, however, the Bank’s NPA remains the lowest among industry peers, standing well below its closest competitors. These record-low NPAs are an indication of the Bank’s commitment to maintain the quality of the loan book by engaging in proactive recovery measures on an ongoing basis.
Sampath Bank’s total asset base grew by 14.3% (annualised 19%) during the period under review to reach Rs. 752.8 b as at 30 September 2017. In comparison, the total asset position as at 31sDecember 2016 stood at Rs. 658.5 b. Gross loans and receivables grew by 17.2% (annualised 23%) to hit Rs. 549.2 b as at 30 September 2017, growing by Rs. 80.7 b for the nine-month period. The total deposit base too increased by Rs. 95.4 b for the same period, to reach Rs. 611.6 b as at the reporting date, a growth of 18.5% (annualised 25%). However at 34.1%, the CASA ratio as at 30 September 2017 showed a decline compared to the 38.4% registered 31 December 2016. The decline can be attributed to the higher growth recorded in the fixed deposit base.
ROE (after tax) reported a marginal decline from 23.47% as at 31 December 2016 to 23.14% as at 30 September2017. However, the ROA (before tax) increased to 2.24% as at the reporting date, up from 2.14% as at 31 December 2016.
The Basic Earnings Per Share for the first nine months of 2017 registered impressive YoY growth of 26.2% to reach Rs. 45.45 as against Rs. 36.01 recorded for the comparative period in 2016. The Statutory Liquid Asset Ratio (SLAR) at DBU and FCBU levels stood at 21.15% and 24.51% respectively as at 30 September 2017, well above the mandatory requirement of 20%.
It is important to note that with effect from 1 July 2017, the entire banking industry switched over to Basel III – International Regulatory Framework for Banks. Accordingly, Sampath Bank’s Common Equity Tier I Capital, Tier I Capital and Total Capital Adequacy ratios as at 30 September 2017, which stood at 8.46%, 8.46% and 11.85% respectively, have been computed based on Basel III requirements for the first time. All three ratios stood well above the minimum regulatory requirement of 6.25%, 7.75% and 11.75% respectively.
The year 2017 proved to be yet another rewarding one for Sampath Bank, with the Bank clinching three of the most prominent international banking awards during the first nine months. Sampath Bank was recognised as ‘Sri Lanka’s Best Bank’ by the prestigious Euromoney Awards for Excellence 2017. This is the fourth time in which the Bank has been awarded the title in the last five years. Sampath Bank was also once again recognised as the ‘Best Commercial Bank 2017 in Sri Lanka’ and ‘Best Retail Bank 2017 in Sri Lanka’ by the UK based World Finance Magazine for the fourth consecutive year.
Sampath Bank upgraded its core banking system to a new version with effect from 1 September 2017. Equipped with a multitude of added features to improve and expedite the level of customer service, the new system will pave the way for an unprecedented banking experience in the years to come.