Sri Lanka’s Hatton National Bank reported a first quarter profit after tax growth of 22.5 percent to 4.5 billion rupees, while the Group reported a PAT of 5 billion rupees which is a 24 percent growth from last year.
HNB expanded its loan book by 33.7 billion rupees during the quarter which represented growth of 5.3 percent, enabling a 10.5 percent year on year (YoY) increase in interest income which totaled 24.9 billion rupees.
The Bank grew its CASA base by 9.9 percent in the three month period to 273.6 billion rupees, improving the CASA ratio to 38 percent from 35.5 percent as at December 2017. As such, growth in interest expenses was curtailed to 7.2 percent YoY while Net Interest Income (NII) grew by 15.1 percent YoY to 10.7 billion rupees.
The low cost deposit base was instrumental in the bank continuing to attain above industry net interest margins.
Commenting on the performance, MD/CEO of the Bank Jonathan Alles stated that “The banking sector is challenged by the implementation of SLFRS 9 reporting standards which could result in higher impairment charges, Basel III regulations requiring greater capital buffers as well as the new Inland Revenue act stipulating numerous and significantly higher taxes on banking revenues. Notwithstanding, we stay positive and committed on continuing our efforts to raise the bar.”
Net Fee and Commission Income increased by 11.6 percent to 2.2 billion rupees relative to the corresponding quarter of 2017. Core non funded income sources being Credit Cards, Trade Finance and Bank Guarantees performed strongly while fees from Digital Channels exhibited promising growth. A net trading loss of Rs 273.7 Mn was reported during the quarter whereas a trading gain of 541.7 million rupees was reported during first quarter 2017.
The total impairment costs of the Bank increased by 587.5 million rupees against the comparable period in 2017, largely due to adverse weather and market conditions.
PBT of the Bank grew by 23.6 percent YoY to 6.3 billion rupees while the PAT improved to 4.5 billion rupees. The Bank recorded a ROE of 16.43 percent and a ROA of 1.84 percent for the first quarter of 2018.The Bank’s asset base grew by 3.8 percent during the quarter to 990.8 billion rupees.
All of HNB’s subsidiaries and joint venture Investment Bank contributed to raise the Group PBT to 7.2 billion rupees.