Seylan Bank says profit momentum continues into Q1 2023

Seylan Bank has begun the new financial year on a strong note, with Q1 2023 recording a Profit Before Tax (PBT) of Rs. 1.7 billion reflecting a robust year on year growth of 17.26%.

Supporting the bottom line, Profit After Tax (PAT) was Rs. 1.135 billion in 1Q 2023, a 7.69% increase over the corresponding 2022 period. Contributing significantly to the bank’s profit momentum was a surge in Net Interest Income (NII) by 67.98% for the period under review.

Growth in the bank’s topline for Q1 2023 was propelled by notable increases in operating income of Rs. 13.3 billion, a 47.26% growth during the period under review compared to Rs. 9.1 billion in the corresponding period of 2022, driven mainly by growth in Net Interest Income, Net Fee Income etc. The bank recorded a substantial increase in interest income, amounting to Rs. 28.9 billion, reflecting a 116.87% growth compared to Q1 2022.

Additionally, Net Fee and Commission Income posted a notable growth of 23.34% to Rs. 1.8 billion from Rs. 1.4 billion in Q1 2022, mainly due to increase in Loans and Advances related Fees, commission income on  Debit and Credit Cards and Other Financial Services etc.

The bank’s total assets as at 31 March 2023 was Rs. 671 billion. While loans and advances was Rs. 424 billon, a contraction mainly due to the impact from local currency appreciation, deposits reflected a marginal growth to Rs. 550 billion. The contraction of assets and liabilities was partly due to local currency appreciation, which led to a decrease in the value of foreign currency assets and liabilities.

Total Operating Expenses recorded an increase of 23.39% from Rs. 3.6 billion in the 1Q of the previous year to Rs. 4.4 billion during the period under review, mainly due to the impact of price increases due to higher inflation and local currency depreciation. The bank’s personnel expenses increased by 13.08 % to Rs. 2.2 billion in 1Q 2023 compared to Rs. 1.98 billion in 1Q 2022 as a result of the salary revision based on the collective agreement and other adjustments provided to compensate rising cost of living expenses. Additionally, establishment expenses increased by 36% to Rs. 2.2 billion during the period under review.

The bank recorded an impairment charge of Rs. 6.4 billion in 1 Q 2023 against Rs. 3.4 billion reported in 1Q 2022 with a growth of 88.14%. The bank increased the impairment provision to capture the impact on emerging global and local economic challenges and the credit risk profile of the customers, thereby continuously assessing the credit quality of the bank’s loan portfolio ensuring adequate provisions are recognised in the financial statements.

Income tax expenses stood at Rs. 585.5 million which is a 41.68% increase from the comparative period, which increased to Rs. 413.2 million due to higher tax rates. Interest expenses increased by 167.62% amounting to Rs. 17.5 billion over the corresponding period in 2022.

Seylan Bank remained soundly capitalised as of 31 March 2023, with the key capital adequacy ratios above the regulatory minimum requirements and recorded 11.17% as Common Equity Tier 1 Capital Ratio and Total Tier 1 Capital Ratio and 13.92% as the Total Capital Ratio.

The Return on Equity (ROE) stood at 8.24% and Return on Average Assets (Profit Before Tax) stood at 1.02% for the period under review. The bank’s Earnings per Share increased from Rs. 1.71 reported in the previous year's Q1 to Rs. 1.84 in Q1 2023. The bank’s Net Assets Value per Share stood at Rs. 90.62 as at 31 March 2023 (Group Rs. 93.29) compared to Rs. 94.24 reported as at the previous year end (Group Rs. 97.27).