People’s Bank reports 1H consolidated pre-tax profit of Rs. 9.4 b

Chairman Sujeewa Rajapakse (left) and CEO/GM Clive Fonseka 

•  Consolidated gross income expands by 34.5% to Rs. 232.7 b
•  Reports total operating income of Rs. 39.6 b on a bank solo basis and Rs. 48.2 b on a consolidated basis
•  Continues to benefit from the industry’s lowest exposure to foreign currency denominated investments subject to external debt restructure
•  Customer digital on-boarding continues to gain strong momentum

People’s Bank yesterday announced the results for its six months ended 30 June, 2023 reporting total consolidated operating income and pre-tax profit amounting to Rs. 48.2 billion and Rs. 9.4 billion, respectively (1H -2022: Rs. 80.7 billion and Rs. 15.2 billion).

Due to higher interest costs; stemming from the high interest rate environment which prevailed during much of 2022 which led to higher of cost of term deposit funding, consolidated net interest income slipped to Rs. 31.4 billion during the six-month period ended June 30, 2023 relative to the same period of 2022. Consolidated net fees and commission income amounted to Rs. 7.9 billion which, excluding one off items during 1H-22, represented a near 6.0% growth on a like for like basis. 

Reflecting inflation pushed cost pressures, much of which originated in the latter part of 1H-22, saw consolidated total operating expenses rise by 12.98% to reach Rs. 30.2 billion (1H-22: Rs. 26.7 billion). This compared relatively well with peers which, in part, showcasing group efforts for greater cost control at every instance so reasonably possible and within its reasonable control. 

Total consolidated customers deposits grew to reach Rs. 2,565.4 billion - i.e., by 4.7%, whilst consolidated net loans contracted by 6.7% to Rs. 1,788.0 billion. This primarily reflected the impact of the rupee appreciation on its foreign currency loan book and, to a notable extent, the cautionary approach taken by both the bank and the Group in credit growth; more so macro-circumstances considered. Total consolidated assets stood at Rs. 3,047.5 billion at period end (end 2022: Rs. 3,133.1 billion). 

The bank’s Tier I and Total Capital Adequacy Ratios were 11.7% and 15.9%, respectively at 30 June, 2023 (end 2022: 11.9% and 16.3%) whilst, on a consolidated basis, it was 13.1% and 16.8%, respectively (end 2022: 13.3% and 17.2%). The bank’s solvency levels remain sound ultimately reflecting efforts made since the onset of Basel III on 1 July, 2017. Further efforts to bolster its regulatory capital, including for the purposes of additional contingency, is currently in process. In addition, the bank successfully met all core regulatory measures during the said period.

Chairman Sujeewa Rajapakse said: “We are pleased with the results of the bank amidst a complex set of challenges and a highly dynamic macroeconomic environment. Notwithstanding the many limiting factors, the bank has, and will continue to, yield benefits of the many initiatives taken to strengthen the many aspects of the bank’s business. Looking ahead, with macro level fundamentals showing signs of positive forward movement, our focus now remains in continuing to support Government in economy critical areas. Amongst other, promoting financial inclusion is, and always will be, our priority where we are working to expand access to financial services, particularly in underserved areas, through innovative approaches and digital solutions.”

“While challenges faced in the recent past have been unlike any seen in the past, the industry’s adaptability, resilience, and commitment has clearly been showcased. That said, whilst fully aware of the challenges yet ahead, we remain focused on creating sustainable value for the country we dearly love and our customers whom we caringly serve. Needless to say, our success is owed to the dedication of our team and the trust and confidence of our customers,” Rajapakse added.

Chief Executive Officer/ General Manager Clive Fonseka said: “Throughout the first half of this year, we navigated through difficult set of circumstances and have once again successfully proved our overall resolve and resilience in the face of extreme adversity. These ultimately attest to the success of our strategic initiatives and operational agility. Looking ahead, with an economic acceleration very much on the cards towards the latter part of this year, and with interest rates likely to further head downward, we as a responsible Financial Institution have already taken measures to extend credit in all key economy critical business segments, particularly in the Small and Medium Scale Enterprise and Export oriented spaces. Our central priority has and continues to be in improving our liquidity, forcing critical strategic initiatives, and continuing to vigorously focus on collections and recoveries. As the financial landscape evolves, People’s Bank remains committed to adapting and innovating to serve our clients better. We look forward with optimism!”