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Chairman Sujeewa Rajapakse (left) and Acting CEO/General Manager Clive Fonseka
People’s Bank yesterday announced a total consolidated gross revenues, total operating income, and pre-tax profit amounting to Rs. 391.2 billion, Rs. 130 billion, and Rs. 26.7 billion, respectively (2021: Rs. 236.8 billion, Rs. 110.7 billion and Rs. 37.2 billion).
In a statement the Bank said primarily reflecting an extraordinarily high interest rate environment that prevailed − consolidated interest income rose by 58.0% during the year under review to reach Rs. 351.4 billion whilst interest expenses soared by 107.5% to Rs. 260.4 billion, reflecting the faster pace re-pricing of term deposits relative to loans.
It said as typically seen throughout the industry, most term deposits at People’s Bank are with maturities of 12 months or less. In addition, in view of preserving and protecting its most vulnerable customer segments − the Bank and Group shouldered much of the interest cost increases − either by delaying or deferring any re-pricing of their loans. These collectively saw Consolidated Net Interest Margins slip by 6.0% to Rs. 91.0 billion (2021: Rs. 96.9 billion).
The Group’s non-funded income accounted for 30.0% of its total operating income during 2022 (2021: 12.5%) aided by an 81.1% increase in consolidated net fees and the extraordinary impact arising from the rupee devaluation. Excluding any one-off increases in fees on a Bank standalone basis, growth was still strong at 26.1% ultimately showcasing the Bank’s ongoing effort to consistently and very systematically improve its non-funded income sources year-on-year, more so in a highly volatile interest rate environment.
Reflecting high inflationary pressures during the year under review which peaked at close to 70.0%, total consolidated operating expenses rose by a measured 16.8% to Rs. 59.0 billion (2021: Rs. 50.5 billion); reflecting prudent cost control and efficiency improvements as exercised at every instance so reasonably possible. This compares well with most peers. As a result, the Bank and Group were able to successfully maintain its cost-to-income ratios at close to 2021 levels despite many limiting circumstances.
Relating to customer delinquencies and credit costs, the Bank assessed all its customers’ stress levels, including more importantly its larger key segments, and staged them on a pre-emptive and prudent basis. To its benefit, the Bank’s exposure to foreign currency investments subject to external debt restructuring was amongst the lowest with an aggregate amortised cost of only $ 51.4 million at 31 December 2022.
Total consolidated customers deposits grew by 13.0% to reach Rs. 2,450.1 billion whilst consolidated net loans contracted by 3.8% to Rs. 1,915.8 billion reflecting the Bank’s and Group’s diligent approach to credit growth more so in a contracting macro-economic context, amongst other factors. Total consolidated assets crossed Rs. 3.0 trillion to reach Rs. 3,133.1 billion expanding by 10.6% from the end 2021.
The Bank’s Tier I and Total Capital Adequacy Ratios were 11.9% and 16.3%, respectively (end 2021: 12.6% and 17.8%) whilst, on a consolidated basis, it was 13.3% and 17.2%, respectively (end 2021: 13.4% and 17.9%). The Bank’s sound solvency levels reflected its efforts to augment its regulatory capital since the rollout of Basel III on 1 July 2017 with efforts to further bolster from current levels slated in the shorter term. In addition, the Bank met all key regulatory measures as at 31 December 2022 without any exception or relief.
Chairman Sujeewa Rajapakse said: “From a macro-economic perspective, 2022 was the culmination of economic stresses and stress events over the last several years. It was a year that saw the country’s external reserve position falling to a level previously unseen, the rupee devalue by close to 80.0%, inflation soar to nearly 70.0%, policy rates increase in a manner unprecedented in view of curbing inflationary pressures and, all in all, resulting in the country’s credit rating fall to a historic low and the economy contract by close to 11.0% which is deepest seen since independence.
“2022 was therefore not a year where the top-line or bottom line was the prime focus but safeguarding customer interests in their absolute time of need, strengthening liquidity and the overall risk management and the governance framework of the Institution for its long-term sustainability was and where improving efficiency and productivity at every instance possible was at the core of all conversations and decisions.
“All these considered, including the added burden shouldered as a responsible State Institution − we are pleased with our 2022 results both on a quantitative and, more importantly, a qualitative front. Looking forward − and as demonstrated over the last three years − we remain committed to being at the forefront of serving the country at every instance possible and meeting every reasonable expectation of all our stakeholders whilst taking requisite steps to strengthen every aspect of the Bank’s overall operations.”
“I take the opportunity to thank my fellow Board Members for their guidance and wise counsel, the retired and incumbent Chief Executive Officer/ General Manager and the entire Management Team for their leadership and the staff at all levels for their tireless efforts. Importantly, a big thank you to our valued customers for their continued trust and confidence in the institution,” Rajapakse added.
Acting CEO/General Manager Clive Fonseka said: “Like any Institution deep rooted in the country’s economic well-being, in line with the country’s fortunes, 2022 was also a year of lows for the Institution. However, what defines us is our ability to immediately impose stop gaps and emerge stronger by systematically resolving such limiting circumstances.
“Looking at 2022 − our success remains in our contribution to the country in its time of absolute need, the interest loss and cost absorbed for the long-term well-being of our most vulnerable customers, and our ability to strengthen the various aspects of the Bank’s business in these trying times.
“Our way forward is clear. Looking ahead, we will endeavour to further strengthen our foreign currency operations including developing our 900 plus global counterparty relationships, further strengthening our deposit franchise be local currency and foreign currency, exercising extra-vigilance in credit expansion with a focus on creating greater diversity in our exposures and, equally important in these times, ensure close monitoring of over-dues and continue to drive cost and efficiency improvements at every instance so possible including by way of further technology adoption. We look forward to it.”
People’s Bank is the country’s Premiere Licensed Commercial Bank with Sri Lanka’s largest banking footprint composed of 745 branches and service centres. With a history spanning over 61 years, the Bank benefits from a staff strength of over 7,300 who tirelessly and diligently serve over 14.7 million customers and over 19.0 million account relationships, which is by far the largest for any financial services provider in the country.
