Amana Bank proves resilience with best-ever performance in FY23

Chairman Asgi Akbarally 

Managing Director/CEO Mohamed Azmeer 

• PBT grows by 92% to Rs. 2.3 b; PAT up 76% to Rs. 1.4 b

Amana Bank has concluded a historic 2023 with its strongest-ever financial performance to date, demonstrating the bank’s stability, resilience and growing acceptance amidst a challenging economic environment. 

In a statement, Amana said the bank’s audited Profit Before Tax (PBT) nearly doubled to Rs. 2.3 billion, reflecting a remarkable 92% YoY increase from Rs. 1.2 billion in 2022. Profit After Tax (PAT) for 2023 broke through the Rs. 1 billion threshold to reach Rs. 1.4 billion, showcasing a YoY growth of 76% from Rs. 0.8 billion in 2022. 

Supported by strong growth in core business, the bank’s financing income increased to Rs. 17.2 billion in 2023, up by 42% from Rs. 12.1 billion reported in the previous year. Maintaining a healthy financing margin of 4.3%, the bank went on to record a Net Financing Income of Rs. 6.5 billion, a 36% YoY increase from Rs. 4.8 billion registered in 2022.

Fee-based income also reflected substantial improvement of 24% to Rs. 931 million, driven mainly by trade volumes generated from our valued business banking customers as well as increased digital transactions and other value added services. Assisted by higher Net Trading Income and other gains, the bank’s total operating income rose to Rs. 9.2 billion, reflecting a remarkable growth of 45% from the Rs. 6.4 billion achieved in 2022.

Considering market conditions, the level of the bank’s advance portfolio, and the need to prudentially maintain higher credit buffers, Impairment charges for the year rose to Rs. 2.1 billion from Rs. 1.6 billion in 2022, an increase of 29%. Despite the incremental impairment charges, Net Operating Income recorded a noteworthy YoY growth of 50% to reach Rs. 7.1 billion from the previous year’s amount of Rs. 4.7 billion.

Sustaining an improved and healthy 42% cost to income ratio despite prevailing inflationary pressure, the Bank closed the year with an Operating Profit before VAT on Financial Services and Social Security Levy of Rs. 3.2 billion, denoting a 85% increase from a year back. The bank’s aggregate tax contribution of Rs. 1.8 billion accounted for a significant 57% of the bank’s Operating Profit before all taxes.

Despite the overall banking industry experiencing negative credit growth, Amana Bank transitioned to positive growth by tactically shifting its focus towards top-tier corporates. As a result, the bank achieved noteworthy 8% growth in its advances to close at Rs. 89.7 billion from Rs. 83.2 billion in 2022. This growth was achieved while continuing to have one of the lowest industry-wide Stage 3 Impaired financing ratio of 1.5% owing to the bank’s effective risk management framework and timely customer engagement, driven by its unique people friendly and development focused approach. By understanding the unique circumstances of SMEs, the bank continued to provide assistance and advisory services to help improve their liquidity position and strengthen their business continuity, financial resilience and revival efforts in difficult times. 

Moreover, testifying the strong customer confidence and the growing demand for the bank’s value proposition, deposit mobilisation activities gained strong traction, amidst tight market liquidity conditions and stiff competition for funds in the market. As a result the bank’s deposit portfolio grew significantly by 18% to Rs. 132.9 billion while maintaining an industry high CASA ratio of 40%.

Towards fuelling its ambitious growth plans, the bank successfully secured Rs. 6 billion through its Rights Issue carried out in Q4, which garnered diverse participation from existing shareholders and new investors, including prominent foreign, corporate, and high-net-worth individuals. The Rights issue enabled the bank to achieve its objectives of meeting the enhanced minimum capital requirement in line with latest regulatory directions to the banking industry.

Crossing the Rs. 150 billion landmark, the bank’s Total Assets grew by Rs. 17.8 billion or 13% YoY from Rs. 141.7 billion in 2022 to close at a solid Rs. 159.5 billion as at end-December 2023.

Given the strong financial performance for 2023, Amana Bank’s ROE grew to 7.7% from 5.6% recorded in 2022, despite the capital infusion of over Rs. 6 billion in the latter part of the year. As at 31 December 2023, Amana Bank’s Common Equity Tier 1 and Total Capital ratios stood at 16.5% and 19.3% respectively, well above the regulatory minimum requirement of 7% and 12.5% respectively. 

Chairman Asgi Akbarally said: “Proving its resilience and ability to power through mounting challenges, I am humbled to note Amana Bank closed the financial year 2023 achieving a number of historical milestones including the best ever financial results in the bank’s history. These achievements are a testament to the growing acceptance of our people-friendly and development focused banking approach as well as the enduring trust and confidence placed on us by our stakeholders. I would like to express my immense gratitude to my fellow Directors, management and staff as well as to our customers and shareholders. Amana Bank will approach the future from a position of strength as we continue to give leadership to this growing industry.”

Managing Director/CEO Mohamed Azmeer said: “2023 was a historic year for Amana Bank, characterised by exceptional performance and remarkable achievements while strengthening the bank’s foundation for our ambitious growth plans with fresh capital infusion that underscored the bank’s resilience and stakeholder confidence amidst a challenging economic environment. This performance was a result of the bank’s continued support towards SME, Corporate and Retail sectors facilitating their needs while adding value to the economy at this crucial juncture where the country’s economic revival is taking shape. 

“I am thankful to our Chairman and the Board of Directors, management, staff, shareholders, customers and valued partners. With the enhanced capital in place, Amana Bank is strategically positioned on a robust launch pad for growth, poised for new horizons, through investments in our core business expansion, digital footprint, and sustainable banking initiatives.”