Pan Asia Bank Achieves Rs. 2 Billion After Tax Profit in First 9 Months Amid Challenges – Profit for Quarter Increases 89% – Adaderana Biz Français
- Net Interest Income – Rs. 6,669million, up 23%
- Net Fees and Commission Income – Rs. 1,256 million, up 41%
- Other operating income – Rs. 274 Mn, up 40%
- Operating profit up 42% to Rs. 3,342 million
- Profit before tax – Rs. 2,718 Mn, up 46% despite an increase in prudential provisions
- Key profitability indicators are among the best in the industry
Net interest margin drops from 4.41% to 4.81%
Return on assets (before taxes) drops from 1.70% to 1.96%
Return on equity (after tax) drops from 14.36% to 16.13%
- The book of loans and advances reached Rs. 143 billion, up 9%
- Customer deposits reach Rs. 149 billion, up 6%
- The ratio of non-performing net advances drops from 2.34% to 1.28%
- The total coverage of the provision for depreciation reaches 76.10% due to the prudential provisioning
- The Bank remains very liquid and well capitalized – all liquidity and capital ratios are well above regulatory minimums
Pan Asia Banking Corporation PLC recorded an impressive performance for the 9 month period ended 30e September 2021 to report pre-tax profit of Rs. 2,718 million and after-tax profit of Rs. 2,008 million with growth rates of 46% and 61% respectively, while demonstrating resilience in a challenging macroeconomic environment . The Bank’s performance has been characterized by strength and resilience despite increased uncertainty due to the impact of the COVID-19 pandemic.
Against the backdrop of the impact of COVID-19 on the Sri Lankan economy, the Bank’s operating profit before VAT on financial services reached Rs. 3,342m with an increase of 42% reflecting the excellence of the basic banking performance and the success of the cost control measures evidenced by the improvement of all the key profitability matrices which are now ranked among the best in the sector. This feat was achieved even after setting aside significant buffers for the likely deterioration in credit quality due to the COVID-19 pandemic. The Bank increased its allowance buffers for loan losses during the 9-month period, judiciously taking into account the increased risks and uncertainties due to the COVID-19 pandemic through experience adjustments and overlays of management. As a result, the total impairment charge for the 9-month period ended September 30, 2021 has increased by 17%.
The Bank’s net interest income (NII) for the period saw an increase of 23% due to a significant reduction in the financial cost of funds at a faster rate than the decline in the interest rates of productive assets. interest although the extension of debt moratoria to sectors affected by the COVID 19 pandemic has had a negative impact on the NII. As a result, the Bank’s net interest margin for the period improved to 4.81% from 4.41% 9 months ago.
In the meantime, the Bank’s net commissions and fees grew by 41% with the rebound in credit demand due to the resumption of economic activities during the 9-month period in the middle of the rate regime. low interest despite the negative impact of lockdowns and waivers. fees and charges imposed by the industry regulator. At the same time, the volatility of exchange rates has enabled the Bank to substantially increase its foreign exchange income, as evidenced by other operating income. On the other hand, the above-mentioned currency volatility had a negative impact on the Bank’s net trading income due to mark-to-market losses on forward currency contracts and currency swaps.
The Bank is committed to maximizing revenues and managing costs despite the vulnerabilities in the sector that have prevailed since last year. The Bank’s cost-income ratio improved from 45.66% to 42.19% during the 9-month period due to the excellent core banking performance which is reflected in the remarkable overall growth major revenue lines and various strategies and measures taken to contain the increase in overheads. The cost management culture embedded across the Bank helped reduce other operating expenses by 8%. At the same time, the increase in allocations for staff performance bonuses, spending on human capital development and staff welfare led to an increase in staff costs during the reference period compared to the period. previous despite downsizing.
The after-tax profits of the Bank for the 9-month period also increased to some extent due to the application of a 24% lower corporate tax rate for fiscal provisioning in accordance with the guideline issued by CA Sri Lanka the 23rd April 2021.
The Bank continues to publish strong key profitability indicators that rank among the highest in the industry. The Bank’s pre-tax return on assets also improved, from 1.70% to 1.96%. In addition, the Bank recorded an astonishing return on equity (ROE) of 16.13% during the period under review, which is among the best in the industry. The Bank’s earnings per share (EPS) for the 9-month period increased to Rs. 4.54 from Rs. 2.83 thanks to the excellent overall performance. Meanwhile, the Bank’s Net Asset Value Per Share (NAPS) appreciated by 13% over the 9-month period to reach Rs. 39.44 as of September 30, 2021.
The total assets of the Bank stood at Rs. 188.97 billion as of September 30, 2021 after registering a growth of 7% over the period supported by the expansion of the loan portfolio. The gross book of loans and advances of the Bank grew by 9% to reach Rs. 143 billion thanks to the overall excellence in the Corporate, Retail and SME segments. Meanwhile, customer deposits grew by 6% to reach Rs. 149bn as of September 30, 2021. The Bank also attracted more current deposits and low cost savings during the period, as over Rs. A total of 8 billion deposits were raised during the period, of which over 86% were low cost deposits. The Bank’s CASA ratio improved by 350 basis points to reach 28.50% at the end of Q3, which is one of the reasons for the reduction in the financial cost of funds during the period under review. .
The Bank’s regulatory gross non-performing loan ratio improved from 6.73% to 6.06% over the 9-month period in a challenging macroeconomic environment, while the net non-performing loan ratio of the Bank improved from 2.34% to 1.28% thanks to prudent provisioning. The Bank continued its targeted actions aimed at managing the quality of its loan portfolio by containing NPLs in a weakened economic landscape.
Bank’s Stage 3 loan ratio at 30e September 2021 stands at 3.20%. The Bank’s phase 3 depreciation ratio on Phase 3 loans at the end of the quarter was 50.99%, while the coverage ratio of the Bank’s total depreciation allowance, that is, – say the total loan write-downs divided by phase 3 loans at the end of the quarter, amounted to 76.10%.
Commenting on the financial performance, the Managing Director / Managing Director of the Bank, Nimal Tillekeratne, said; “We are extremely proud and delighted to deliver such an excellent performance in the extreme conditions created by the COVID-19 pandemic. This performance was hard-won thanks to a proactive approach to business while taking advantage of emerging market opportunities in a prudent manner. Despite the moratoriums and provisions that had to be made, the Bank managed to achieve profitability while consolidating the confidence of customers and investors ”.
The Bank maintains all of its capital and liquidity ratios well above minimum regulatory standards. The Tier 1 capital ratio and the total capital ratio of the Bank as at September 30, 2021 were 12.36% and 14.63% respectively. The Bank’s statutory liquidity ratios (SLARs) as of September 30, 2021 were 28.76% and 50.25% respectively for the Domestic Banking Unit and the Offshore Banking Unit. At the same time, the Bank’s Liquidity Coverage Ratio (LCR) under BASEL III was well above regulatory minimums. The Bank maintained LCR ratios of 207.38% and 180.01% for all currencies and LKR respectively.