People’s Bank posts consolidated PAT of Rs. 21.5 b in 2018

People’s Bank Group yesterday announced its financial results for the year ended 31 December 2018 with consolidated total operating income rising by 22.0% year-on-year to reach an industry high of Rs. 94.5 billion. 

Chairman Nissanka Nanayakkara

Chief Executive Officer/General Manager N. Vasantha Kumar

Consolidated after tax profits registered an increase of 4.8% year-on-year setting another industry benchmark of Rs. 21.5 billion for the year 2018. On a bank standalone basis, these were Rs. 74.6 billion and Rs. 17.1 billion, respectively 

Reflecting macro-economic stresses and higher non performing advances, consolidated impairment charges rose by 189.2% during the year to reach Rs. 8.8 billion. On a standalone basis, the bank’s impairment cost for 2018 was Rs. 7.3 billion, up 443% from Rs. 1.3 billion in 2017. 

Meanwhile the day 1 impact owing to the migration to the more futuristic SLFRS 9 loss model was less than Rs. 1.3 billion across the Group. This translated to less than 0.2% of consolidated risk weighted assets. The relatively lower impact as compared with the industry attests to the prudent impairment policy adopted by the bank even under LKAS 39.

Consolidated operating expenses grew by 21.2% to reach Rs. 45.1 billion which, in notable part, reflecting the increase in personnel costs which stemmed from a routine, once every three year, salary revision as undertaken during the year 

Consolidated profit before tax increased by 4.3% to Rs. 31.2 billion, an all-time record for the Group. On a bank standalone basis, it was Rs. 24.4 billion representing a 5.8% decline primarily due to higher impairment cost relative to the year prior.

Return on assets (before tax) on a consolidated basis was 1.77% in 2018 down from 1.95% in 2017 reflecting the pressure on profit growth stemming primarily from higher impairments – as seen also throughout the industry 

Total consolidated contribution made to the Government in the form of taxes, special levy and dividends during 2018 totalled Rs. 23.4 billion (2017: Rs. 23.3 billion) 

Customer deposits grew by 14.5% on a consolidated basis to reach Rs. 1,495 billion whilst consolidated customer advances grew by 23.8% to Rs. 1,416 billion. From a Group perspective, gross non-performing loans as function of total gross loans edged up to 2.7% as compared with 2.03% at end-2017. On a bank standalone basis, it was 2.49% up from 1.87% at end 2017.

Consolidated tier I and total capital adequacy levels were 11.91% and 14.80%, respectively at end-2018 (end 2017 11.49% and 13.71%, respectively). On a bank standalone basis, these were 11.37% and 14.89%, respectively (end 2017: 10.82% and 13.51%).

Commenting on the results, People’s Bank Chairman Nissanka Nanayakkara stated: “We are pleased with the progress of the bank more so amidst a year of challenge emanating from a difficult market environment and a year of change in terms of the regulatory framework in which it operates. Our successes are ultimately owed to our customers for their unwavering trust and confidence in us and our employees for constantly pushing the boundaries of success even despite limiting circumstances. PB’s core aspiration remains unchanged. We will continue to assist the National Government further its economic agenda whilst promoting greater financial inclusion across all customer segments of varying demographic and social economic profile and institutions of varying nature and scale of operations. Not complacent with our successes, we remained focused on our future. In this context, we are looking to optimally deploy our industry-leading digital transformation strategy which will make banking hassle free and accessible to all at all times. Expediting our Act related amendments is currently one of our key priorities. No sooner done, it will enable the bank realise its true potential.”

Chief Executive Officer/General Manager N. Vasantha Kumar commenting on the results stated: “The year 2018 was a challenging one with earnings pressures stemming from a weak macro-economic environment with notable rises in customer non performing advances. Undeterred by these challenges, we purposefully worked towards strengthening our collection and recovery efforts and to further refine our internal processes and overall risk management framework. These initiatives are yet ongoing and are likely to remain active over the foreseeable future. Moreover with large parts of PB’s business model being affected by the digital transformation strategy, we undertook multiple initiatives to not only enhance our IT platforms but also to enhance our security levels. We have thereby invested in strengthening PB’s capacity to safeguard customer privacy through advanced security architecture and have made notable strides towards further improving our cyber security framework. These initiatives are collectively recognised in the ISO/IEC 27001: 2013 Information Security Management Standards certification as awarded to the institution. 

“Going forward, we want to continue to live up to the People’s Bank legacy of being the ‘Bank of the People,’ which will be our overarching priority. We will do so by also creating exceptional customer experiences through our highly user friendly digital channels. The many awards/ accolades received for our digital initiatives does attest to the leadership status enjoyed by the bank on this front. I am pleased to say that the bank is now geared for the next phase of growth.”