Sampath Bank Group, which consists of Sampath Bank and four subsidiary companies, has recorded a profit before tax of Rs.2.4bn for the first half 2013 with the Bank recording a profit before tax of Rs.2.26bn. The post-tax profit of the group and the bank for the same period amounted to Rs.1.71bn and Rs.1.61bn respectively. The financials of the bank for the period was audited by the external auditors.
The Bank said the results were achieved amidst many challenges posed by the external market forces, which included excess liquidity, lower credit demand and worldwide decrease in gold prices. In addition, two main issues, namely the drop in FX revaluation gains and additional impairment provisioning made on pawning advances during the period, adversely impacted on the profit growth of the Bank, despite the strong growth recorded in key core banking income areas such as net interest income and commission income.
Revaluation gain
The revaluation gain of Rs.1.4bn recorded in the first half 2012 on the Foreign Currency Reserves of the FCBU, turned out to be a revaluation loss of Rs.28.8m in the first half 2013, which figures are reported under “Other Operating Income” of the published accounts. This was solely due to the significant depreciation of LKR by Rs.20.00 during the 1H 2012, as against the appreciation of LKR by Rs.0.90 during the 1Q2013, in which period bulk of the FC reserves held was converted in to LKR.
Pawning provision
The Bank also booked an impairment provision on pawning advances amounting to Rs.989m during the 1H2013. This provision has been computed taking into account the gold prices that prevailed as at June 30, 2013. The provision covers not only the “fallen due” category, but also the performing category. In fact, two thirds of the above mentioned provision, amounting to Rs.646m was on account of the performing pawning advances. Total impairment provision on pawning advances was about 1.66% of the total amortized cost of pawning portfolio of Rs.59.4bn of which included capital and interest receivable.
Net interest income
Net Interest Income of the Bank, which is the main source of income from the fund based operations and representing over 50% of the total operating income, rose from Rs 5,445.8m in the first half 2012 to Rs.6,870.9m in first half 2013, recording a significant growth of 26.2%.
Business growth
The growth rates in deposits, advances and total assets recorded by the Bank during the first half 2013, which amounted to 9.3%, 11.2% and 10.6 % respectively, compared well with the industry’s growth rates of 7.92%, 3.35% and 7.98% recorded in the respective areas during the period.
Statutory liquid asset ratio
This ratio marginally rose from 22.40% as at 31.12.2012 to 23.00% as at 30.06.2013. Though this ratio was somewhat above the minimum requirement of 20%, it was not as high as the industry average of around 29.2%, due to the prudent trade-off maintained by the bank between its liquid and earning assets
Sampath Bank first half Profit bofore tax Rs.2.4bn
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