Sampath Bank further extended its growth momentum in the 2nd quarter of the year and recorded a post-tax profit of Rs 5.7 Bn for the six months ended 30th June 2017. This registered an impressive 35.1% YoY growth in comparison to the Profit After Tax (PAT) of Rs 4.2 Bn recorded for the six months ended 30th June 2016. Profit Before Tax (PBT) too grew by 36.6% YoY and reached Rs 7.8 Bn by 30th June 2017.
The Sampath Group, which comprises of Sampath Bank and four fully owned subsidiary companies, also posted a growth of 36.8% and 35.0% at PBT and PAT levels respectively.
Net Interest Income (NII), which is the main source of income representing almost 70% of the total operating income of the Bank, recorded an increase of Rs 3.0 Bn (29.0%) during the period under review. Accordingly, the Bank recorded Rs 13.1 Bn as NII for the 1st half of 2017, as against Rs 10.2 Bn recorded for the corresponding period in 2016.
The above achievement was made possible due to the robust growth recorded in the Bank’s fund base, as indicated by 11% (annualized 22%) growth in deposits and 12% (annualized 24%) 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 29% growth in NII.
Net fee and commission income, which largely comprises of credit, trade, card and electronic channel related fees increased to Rs 3.8 Bn during the period under review, as opposed to Rs 3.0 Bn recorded during the corresponding period in 2016. This income source too has posted an impressive YoY growth of 26.3% largely due to the robust growth recorded in advances, expansion of credit card operations and the successful launching of innovative value additions through electronic channel offerings.
The Bank’s other operating income, net trading income and gains from financial investments too recorded an increase of 43% during the period under review. Increase in realized exchange income and dividend income from financial assets have contributed to the said increase in other operating income. Consequently, other operating income for the 1st half of 2017 stood at Rs 2.0 Bn, as opposed to Rs 1.4 Bn reported during the corresponding period in 2016.
Operating expenses of the Bank which stood at Rs 7.2 Bn during the 1st half of 2016, increased to Rs 7.9 Bn during the period under review, reflecting an YoY increase of 9.5%. This increase was mainly due to increase in personnel expenses triggered by annual salary increments. Other overhead expenses too increased due to general price hikes and indirect tax increases. However, the Cost to Income ratio excluding VAT & NBT on financial services improved to 41.6% in the first half of the year from 49.3% reported in the same period in 2016. This records an improvement of 770 basis points, which is a significant achievement particularly in view of Sampath Bank having one of the youngest branch networks compared to its closest competitors.
Impairment charges amounting to Rs 1.35 Bn recorded for the first half of 2017 showed an increase of Rs 794 Mn over the comparative period’s charge of Rs 561 Mn. Impairment provision of already impaired individually significant customers was further increased during the first half of 2017 after considering the current status of the recovery process. Consequently, impairment charge on account of individually significant loans increased by 39% during the period under review. On the other hand, collective impairment charge increased by Rs 545 Mn predominantly due to the growth in the loan portfolio. Marginal increase in NPA ratio from 1.61% in December 2016 to 1.77% in June 2017 too has contributed to the above increase in collective impairment. However, the Bank’s NPA is still the lowest among industry peers and stands well below its closest competitors. This provides an indication of the quality of the loan book and the unique and efficient recovery measures implemented by the Bank.