Sampath Bank in mega quest to raise Rs. 20 b via Rights, Debt

• Fresh capital-boosting move comes hot on the heels of oversubscribed Rs. 6 b debenture issue

Sampath Bank yesterday announced an unprecedented move to raise a mammoth Rs. 20 billion to boost its capital via equity and debt issues, hot on the heels of raking in Rs. 6 billion via debentures last week.

The third largest private bank and one of the industry’s best performing so far this year, Sampath Bank announced a three for 13 Rights Issue at Rs. 250 each. The move will involve the issuance of 50.13 million shares and raise Rs. 12.5 billion. Additionally, the bank also announced an issue of 50 million five-year Listed, Rated, Unsecured, Subordinated, Redeemable, Basel III Compliant Convertible Debentures with an option to issue up to a further 25 million convertible debentures in the event of an oversubscription at a consideration of Rs. 100 each. 

The combined issues will raise a maximum of Rs. 20 billion aimed at boosting the capital of the bank to comply with the stringer Basel III requirements. 

The announcement of a fresh round of fundraising comes soon after it raised Rs. 6 billion last week via a Basel III compliant, Tier II, rated, unsecured, subordinated, redeemable, five-year debenture issue, which was oversubscribed on Friday.

 Funds raised via the debenture were to be used to support its loan book expansion and to strengthen its Tier II capital base.

Pending yesterday’s announcements, the trading of Sampath Bank shares was suspended but thereafter the stock closed at Rs. 315, down by Rs. 16.20 or 5%. 

The net asset value per share as of 30 September 2017 was Rs. 287 at the Bank level and Rs. 317 at the Group level, up from Rs. 239 and Rs. 267 from 31 December 2016.

Continuing its robust growth momentum, Sampath Bank achieved Rs. 8.5 billion in Profit After Tax (PAT) within the first three quarters of 2017, up by 26.2% from a year earlier. Profit Before Tax (PBT) too grew by 32% YoY to reach Rs. 11.8 billion for the nine months ended 30 September 2017.

The Group, which comprises 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 30 September 2017.

Sampath Bank’s total asset base grew by 14.3% (annualised 19%) during the period under review to reach Rs. 752.8 billion as at 30 September 2017. 

In comparison, the total asset position as at 31 December 2016 stood at Rs. 658.5 billion. Gross loans and receivables grew by 17.2% (annualised 23%) to hit Rs. 549.2 billion as at 30 September 2017, growing by Rs. 80.7 billion for the nine-month period. The total deposit base too increased by Rs. 95.4 billion for the same period, to reach Rs. 611.6 billion as at the reporting date, a growth of 18.5% (annualised 25%). 

However, at 34.1%, the CASA ratio as at 30 September showed a decline compared to the 38.4% registered on 31 December 2016. The decline can be attributed to the higher growth recorded in the fixed deposit base.

Post third quarter results, the bank said its 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.

Vallibel One Plc, controlled by business leader Dhammika Perera, owns 15% stake in Sampath Bank followed by Ishara Silva (10%), the Employees Provident Fund (10%) and Rosewood Ltd. (5%).