Pan Asia Bank ups 3Q profit by 200% to Rs. 300 m

Wednesday, 28 October 2015 00:02 -     - {{hitsCtrl.values.hits}}

Pan Asia Banking Corporation PLC has increased its Profit After Tax (PAT) by a staggering 197% to Rs. 300.2 million for the quarter ended 30 September 2015 (3Q’15) from a year ago, supported by improved performance from all segments. The earnings per share (EPS) rose to Rs. 4.04 from Rs. 1.36 a year ago.BUP_DFT_DFT-1-11

As a result, the bank’s PAT for the nine months ended September 30, 2015 has risen by 171% year-on-year (yoy) to Rs.751 million (EPS of Rs.3.40). This is the third consecutive quarter the bank has increased its after tax profits by over 100% yoy demonstrating the consistency in its performance. 

This has been possible due to above average growth in the bank’s loans and receivables while maintaining healthy margins and asset quality, continuous improvements in its cost structure and enhanced service quality.

The growth in the bank’s gross loans and receivables to customers has continued to bypass the industry average and during the nine months to September 2015 the portfolio grew by as much as 29% or Rs. 18.4 billion. 

In effect, the bank’s growth in loans and advances book accounts for closer to 5% of the total private credit in the economy granted during this period.   

“This demonstrates that Pan Asia Bank plays a significant role in the overall economy and we will continue to play the role of a catalyst in meeting the financial needs of the aspirational Sri Lankans and enterprises whilst contributing to the overall economic development of the country,” said Pan Asia Bank’s Director and CEO, Dimantha Seneviratne.

At a time when the banking sector Return on Equity (RoE) comes under pressure due to narrowing margins, Pan Asia Bank has continuously driven its return to its stock holders up to 19.77% by the end of 3Q 2015, virtually doubling the RoE from 9.81% in December 2014.

The bank has made tremendous progress in its core-banking performance even under challenging conditions as the Net Interest Income (NII) rose 72% and 55% respectively to Rs.1.10 billion and 2.9 billion during 3Q 2015 and nine months. 

Amidst pressure on banking sector margins, Pan Asia Bank has widened its net interest margin to 4.48% from 3.82% in December 2014 due to prudent re-pricing and active assets and liability management.

In order to support its lending drive, the bank raised Rs.4 billion in debentures at very competitive rates which was oversubscribed on the opening day itself, demonstrating the strong confidence placed on the bank’s current and future strategies. 

The non-fund based income of the bank showed continuous growth as a result of the concerted effort towards diversifying the income sources. In addition to generating new relationships, there was increased contribution from trade finance and fee and commission income.

As a result, the net fee and commission income rose 26% and 33% respectively to Rs. 189.6 million and Rs.572.4 million during 3Q 2015 and the nine months to end September. Other operating income and exchange income made a significant contribution, rising by 161% and 132% respectively to Rs.217.7 million and Rs.484 million.

Overall, the bank’s total operating income i.e. NII and non-fund based income increased by 65% and 50% respectively to Rs.1.54 billion and Rs.4.21 billion during the same period.

Despite the increase in operating costs in absolute terms, the bank continued to bring down its cost-to-income ratio to 52% from 61% in December 2014 by way of lean management practices, process automation and eliminating non-value adding activities in the processes.

The bank will embark on a Business Process Re-engineering program to further improve turnaround times and service aspects in processes.

The Return on Assets was doubled to 1.15% during the nine months, further demonstrating the effectiveness and the quality of the bank’s assets.

The bank continued to invest in staff development in order to develop its next generation of leaders and talent management.  This was reflected in increase in personnel expenses by 19% and 22% respectively to Rs.342.5 million and slightly over Rs.1 billion during 3Q 2015 and nine months. 

Having successfully migrated to a new core-banking system and Treasury system during the 1Q 2015 and 2Q 2015 respectively with significant capital investments, the Bank will further enhance the productivity of operations and the customer delivery touch points by focusing on building up the information technology and digital banking platforms .

Pan Asia Bank recorded a significant milestone in reaching an asset base of Rs.103.1 billion by end September 2015 keeping its promise to its stakeholders. In effect, the bank’s balance sheet has grown by 29% or Rs.23.5 billion during the nine months alone. In perspective, the bank’s assets have grown five folds in just six years as the bank’s asset base by the end of FY 2009 was just under Rs.22 billion.

“This achievement wouldn’t have been possible if not for the support from all segments of the bank i.e Retail, SME, Corporate and Treasury and most importantly the unstinted commitment from all staff who went that extra mile to delight our customers,” Seneviratne stated.

Meanwhile the deposit base of the bank grew by 19% or 12.5 billion to Rs. 77.4 billion.

Further, in September 2015, the bank completed its re-financing green facility with the Global Climate Partnership Fund (GCPF) by taking the receipt of $ 10 million (Rs.1.43 billion) re-financing which strengthened the FCY funding of the balance sheet.

Despite the higher precautionary provisions for possible loan losses, in a noteworthy move, the bank has further improved its asset quality as both its gross and net non-performing loan ratios declined to 5.36% and 3.64% respectively from 5.73% and 3.78% in December 2014.  

Capital adequacy levels – both Tier I and Total Capital ratios remained at 7.14% and 11.66% respectively by the end of 3Q 2015, above the regulatory minimums of 5% and 10% respectively.

Having crossed the Rs. 100 billion asset base well in advance of the target date, the bank is now in the next league of players competing with the giants in the industry.

Hence, in the ensuing quarter, the bank will leverage on the positive macro-economic fundamentals, its growing franchise, state-of-the art technology and its superior customer service at all levels to embark on a higher growth trajectory as the bank is now well poised to reach greater achievements.

COMMENTS