Seylan Bank impresses with over Rs. 1 b after tax profit in 1H
Tuesday, 30 July 2013 00:36
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Despite a challenging external environment, Seylan Bank turned in yet another impressive performance with profit before income tax reaching Rs. 1,483 million for the six months ended 30 June 2013. Profits after tax reached Rs. 1,002 million, a 4.32% increase compared to Rs. 960 million reported in the corresponding six month period in 2012. The interim financial statements have been prepared in accordance with LKAS/SLFRS.
Due to the sharp and sustained drop in gold prices and its resultant impact on the pawning base, the sluggish credit off take and industry-wide pressure on interest margins, net interest income decreased by 3% to Rs. 4.33 billion for the 6 months ended 30 June 2013.
However, somewhat offsetting the above, fee and commission income increased by 28% from Rs. 763 million to Rs. 973 million with the bank increasing its focus on trade finance and fee income generating products and services.
During the six months under review, the bank also focused considerably on cost containment. As a result of many effective initiatives controls, personnel and overhead costs were contained to a mere 3.4% increase during 1H 2013.
Despite fierce competition the deposits base grew from Rs. 146.7 billion to Rs. 155.6 billion. Net advances portfolio grew from Rs. 124.7 billion to Rs. 130.5 billion during the six months under review, despite lower than expected credit demand and the impact of lower gold prices on pawning related activities.
The bank was also able to improve its asset quality through effective recovery and rehabilitating efforts. This enabled the bank to significantly reduce its gross NPA (net of IIS) from 12.99% in December 2012 to 11.15% as at end June 2013.
Preparing for future growth, the bank also successfully implemented a core banking system upgrade in February 2013. This will bring about significant cost efficiencies through process improvements to the bank in the coming years. The upgrade will also facilitate much additional functionality, enabling better product and service delivery to its customers.
Chairman of Seylan Bank, Nihal Jayamanne PC, stated: “The bank has posted yet another strong performance recording growth in profit after tax in 1H 2013 and these results provide us an excellent platform to achieve sustainable growth.”
As at 30 June 2013, the bank network comprised of 149 branches, 156 ATMs and 78 student savings centres. Subsequent to the successful Rs. 2 billion debenture issue that was over-subscribed on the opening day, the bank’s total capital adequacy ratio stands at 15.24% at the end of Q2 2013, one of the highest in the local banking industry.
General Manager/CEO of Seylan Bank, Kapila Ariyaratne, stated: “Forward looking strategies and commitment to continuous improvement have made it possible for us to maintain our growth momentum despite a challenging external environment.
“We will continually invest on identified key areas which are in line with the bank’s future growth strategies including new product development, branch expansion, service quality improvement, staff training and development and IT infrastructure to provide our loyal customers the high level of personalised and friendly service that they have now come to expect from us and increasingly reward our other stakeholders too for their valued association with us.” As a result of the impressive 1H 2013 performance, earnings per share stood at Rs. 2.93 while return (profit before tax) on assets and return on equity stood at to 1.53% and 10.36% respectively.
