Pan Asia Bank posts compelling performance in 2022 while looking ahead with optimism

Chairman Jayantha S.B. Rangamuwa, MD/CEO Nimal Tillekeratne and CEO-designate Naleen Edirisinghe 

Pan Asia Banking Corporation PLC has reflected resilience amidst a multitude of adversities emerging from challenging macro-economic conditions, as the bank reported its financial performance for the year 2022, which showed judicious portfolio management and prudency exercised in managing asset quality.

The interest income for the year rose by 42% due to increase in market lending rates and re-pricing effect of facilities in response to the market conditions, resulted from the policy decisions taken by the Central Bank of Sri Lanka to increase the policy rates and remove the interest rate caps on certain Lending products. Further, the significant volume growth in Pawning advances and Term Loans also led to the increase in interest income. 

The Total Assets of the bank stood at Rs. 208 billion as of 31 December 2022 after posting a growth of 10% during the year, supported mainly by the expansion in Rupee Treasury Bills and loan book. The Gross Loans and Advances book recorded a growth of 2% to reach Rs. 154 billion with major contributions from the Retail segment. 

The bank’s profit was weighed down by higher credit loss expenses and exchange losses on loans and advances and foreign currency denominated financial instruments of the Government of Sri Lanka. The bank increased its provision buffers for loan losses during the year under review sensibly, through introducing changes to its impairment models taking into consideration of increased level of risks and uncertainties emerged due to the turbulent economic conditions prevailed in the country.

“Our performance is a testament that we have put quality over quantity this year, when circumstances dramatically changed from what we witnessed last year. This was achieved by managing assets and liabilities to generate returns from our existing portfolio while also keeping a closer tab on the operational expenses amid runaway inflation,” said Managing Director/Chief Executive Officer Nimal Tillekeratne. 

The bank increased the impairment provision buffers on its investments in Sri Lanka International Sovereign Bonds (SLISBs) up to 35%, due to the increased level of credit risk as a result of prevailing external public debt service standstill of the Government of Sri Lanka, and the possible adverse outcomes of the ongoing comprehensive debt restructuring program.

The amounts charged to the income statement during the year 2022 include provisions made on foreign currency exposures to the Government of Sri Lanka amounting to Rs. 3.80 billion. However, when presenting the figures, the management has presented the impact of the currency depreciation on the impairment charges of loans and advances and investments under Other Operating Income/Losses, where the exchange gains from the corresponding assets have been recognised.

Pan Asia Bank strived for earnings maximisation through portfolio re-alignment and cost management despite sector vulnerabilities that prevailed since last year. 

The bank reported a Net Interest Margin of 4.70% during the year 2022. Meanwhile, the bank reported a Return on Equity (ROE %) of 10.58% and a Post-Tax Return on Assets of 1.00% despite unprecedented macro-economic conditions during the year under review. 

Earnings Per Share (EPS) for the year dropped to Rs. 4.52 from Rs. 6.95 mainly due to increased inflated funding costs, exchange losses and impairment charges. Meanwhile, the bank’s Net Asset Value Per Share as of 31 December 2022 stood at Rs. 46.58 after an appreciation of 11%.

Pan Asia Bank maintains all its Capital and Liquidity Ratios well above the regulatory minimum standards. Its Tier 1 Capital Ratio and Total Capital Ratio as of 31 December 2022 stood at 14.09% and 16.07% respectively. Further, its leverage ratio stood at 8.21% at the year end.

The bank’s Bank Level Statutory Liquid Assets Ratio (SLAR) as of 31 December 2022 stood at 21.60%. Meanwhile, the Liquidity Coverage Ratio (LCR) under BASEL III stood well above the statutory minimums. The Bank maintained an LCR of 226.09% and 253.11% for All Currencies and LKR respectively.

“I am proud to say that Pan Asia Bank was able to navigate the challenging year in a prudent manner to further strengthen the confidence of its all stakeholders and demonstrate its credentials as the Truly Sri Lankan Bank in the country by supporting its employees, customers and the wider community. I wish to thank our customers, business partners, employee and management, and the Board and the regulator for their guidance, and for being with us in continued cooperation during unprecedented times. We move ahead with determination to take any challenge as a responsible corporate citizen to steer the economy forward and look ahead with cautious optimism to better times ahead,” said Chairman Jayantha S.B. Rangamuwa.