Amana Bank’s resilience continues with 44% growth in Mid-Year PBT

Chairman Asgi Akbarally

Managing Director/CEO Mohamed Azmeer

Amana Bank continued its upward performance trend by recording a 2023 Mid-Year Profit Before Tax (PBT) of Rs. 802.8 million, reflecting a substantial growth of 44% in comparison to Rs. 556.9 million booked a year back. Owing to its resilient performance despite the challenging economic environment, the Bank in Q2 alone achieved a YoY PBT growth of 122% to reach Rs. 379.4 million from Rs. 171.2 million. Despite accounting for higher taxes, the Bank went on to achieve a half yearly Profit After Tax (PAT) of Rs. 419.6 million corresponding to a healthy growth of 16%, whereas in Q2 the Bank’s PAT grew by 79% from Rs. 111.3 million to Rs. 198.9 million.

The Bank maintained its robust top-line performance thorough the first half of 2023, posting an 80% growth in Financing Income from Rs. 4.85 billion to reach Rs. 8.75 billion, which was well supported by effective deployment of funds and timely re-pricing of advances and liabilities. As a result the Bank’s Financing Margin improved to 4.8% from 3.6% to end the first half with a Net Financing Income of Rs. 3.36 billion, reflecting a 68% YoY increase. 

The Bank’s Total Operating Income grew by a significant 66% to reach Rs. 4.47 billion, with Net Fee and Commission Income and Net Trading Income contributing Rs. 474.4 million (66% YoY growth) and Rs. 622.9 million (47% YoY growth) respectively. Despite accounting for a higher level of impairment to mitigate risks of those businesses vulnerable to economic shocks, which resulted in impairment charges increasing by 191%, the Bank fared to grow its Net Operating Income by 38% to reach Rs. 3.04 billion from Rs. 2.19 billion posted in H1 2022.

The Bank posted a commendable growth of 57% in Operating Profit before VAT on Financial Services and Social Security Contribution Levy for H1 to reach Rs. 1.23 billion compared to Rs. 0.78 billion achieved a year back. Total Comprehensive Income for the period stood at Rs. 387.2 million reflecting a healthy YoY growth of 38%.

Amidst tight liquidity conditions and competition for funds in the market, the Bank continued to witness an increase in acceptance for its people friendly banking model, resulting in customer deposits growing by a commendable 9% to close H1 2023 with a portfolio of Rs. 122.9 billion, maintaining a healthy CASA ratio of 42%, while customers advances closed at Rs. 80.0 billion. 

Owing to timely customer engagement and effective portfolio management, the Bank improved its Stage 3 Impaired financing ratio to 2.2%, well below the market average. The Bank’s total assets as at end of 30 June 2023 stood at Rs. 142.0 billion while the Bank’s total capital ratio stood at 15.4%, well above the minimum regulatory requirement of 12.5%. This performance reflects Amana Bank climbing up 14 positions in the latest LMD Brand Finance Top 100 Most Valuable Brands in Sri Lanka.

The Bank recently announced its intention to raise Rs. 6.7 billion in equity capital by way of a Rights Issue which will facilitate in meeting the minimum capital requirement of Rs. 20 billion for licensed commercial banks. Once approved by CSE and shareholders, the Bank will issue 2,902,267,365 ordinary voting shares in the proportion of 1 new share for every 1 share held at a consideration of Rs 2.30 per share. Demonstrating its commitment to deliver long-term value to shareholders owing to its positive performance trend, the Bank recently also declared an interim scrip dividend of Rs. 0.12 per share, which is the Bank’s 6th consecutive dividend.

Commenting on the Bank’s mid-year performance, Chairman Asgi Akbarally said “Amana Bank’s exceptional performance in the first half of 2023 stands as a testament to our unwavering resilience in the face of a challenging environment. With our people-friendly banking model at the forefront, we have not only weathered the storm but thrived, achieving one of our best-ever quarters and setting new standards of achievement. As economic conditions progressively show signs of improvement, our optimism continues to grow. We extend our deepest gratitude to our esteemed stakeholders who have been pivotal to our journey, and we eagerly anticipate the opportunities that lie ahead.”

Also sharing his views on the Bank’s performance Managing Director/CEO Mohamed Azmeer said “Our strong mid-year performance in the backdrop of the current macroeconomic environment, echoes the Bank’s stability, resilience and continued acceptance. This achievement reinforces Amana Bank’s commitment in stimulating economic growth through our people friendly banking model, fostering financial well-being to our customers. I am thankful to my fellow Directors, management, staff, shareholders and customers for their continued support, trust and confidence in Your Bank. With optimism, we look forward to a promising journey ahead during the rest of the year and beyond with a strong growth outlook.”