Sri Lanka’s People’s Bank exceeds Rs. 60 billion in operating income in 1H22
The Morning: People’s Bank announced the results for the six months ending 30 June 2022, with its total operating income rising by 54.9% to reach Rs. 69.3 billion, whilst total operating expenses grew by 3.7% to Rs. 20.8 billion, reflecting sound cost control and efficiency improvements despite mounting inflationary pressures.
Commenting on the results, People’s Bank Chairman Sujeewa Rajapakse stated: “Despite extraordinary challenges on a macro front, the bank’s results provide some insight into its capacity to navigate through these circumstances. Needless to say, similar to most others in the industry, limited access to foreign currency is its key source of distress. As a responsible Domestically Systemically Important Bank (DSIB) with a broader national role, the bank played a leading role post-Covid-19 to support the Government and the country’s internal ecosystem function without any interruption by facilitating, amongst other, a bulk of the country’s essential imports including petroleum products.
“To ease pressure on the foreign currency front, several measures are currently being explored in co-ordination and support of key stakeholders. We remain committed to supporting the country’s economic revival initiatives in every instance possible.”
Impairment charges rose by 319.9% to Rs. 32.8 billion, reflecting macroeconomic stresses including those relating to its key customer segments. Profit Before Tax (PBT) amounted to Rs. 11.6 billion, representing a decline of 12.5% over the same period in 2021.
The net interest income, which accounted for close to 75% of the bank’s top line, grew by 30.5% to reach Rs. 51.7 billion reflecting both asset growth and net interest margin improvements. Fee-based income grew by 160.9% to reach Rs. 9.8 billion, reflecting the bank’s ongoing efforts to also improve its other non-funded sources of income. From a cost-to-income perspective, primarily reflecting top-line growth and cost control, the bank’s cost-to-income ratio was 35.9% during H122 as compared with 53.0% during the same period in 2021. Profit After Tax (PAT) was Rs. 8.3 billion, dipping by 21.3% over the same period in 2021.
Total deposits grew by 12.6% to reach Rs. 2,332.8 billion whilst net loans amounted to Rs. 1,812.2 billion – contracting by a marginal 1.3%. Reflecting elevated levels of risk across select key customer segments, the bank’s Stage 3 loans as a function of total gross loans increased to 10.4% from 4.0% at the end of 2021. Total assets reached Rs. 3,007.3 billion growing by 13.6% from the end of 2021.
Tier I and Total Capital Adequacy on a bank standalone basis was 10.4% and 15.0%, respectively (end of 2021: 12.6% and 17.8%), whilst on a consolidated basis, it was 11.6% and 15.6%, respectively (end of 2021: 13.4% and 17.9%). This was without any reliefs or other exceptional considerations and compared with industry peers.
People’s Bank CEO/General Manager Ranjith Kodituwakku stated: “With pressures mounting from an interest margin and credit cost perspective, we have used the opportunity to also strengthen our platform from a business, operational, and risk management perspective.
“As a bank with national interest at heart, we have allocated greater resources to support small and medium-scale enterprises (SMEs) and certain other economy-critical market segments. Conscious of the challenges ahead, we remain fully committed to serving our customers and preserving the interest of all our stakeholders.”
People’s Bank stated that being recognised amongst the “World’s Top 1,000 Banks” once again is an achievement that admits the present challenging environment. It accentuates its consistent and robust delivery even amidst adversity and attests to its standing not only locally but also globally.
OSL take:
The operating income recorded by one of Sri Lanka’s main state banks, People’s Bank, is indicative of the strength and growth of the country’s banking sector. A resilient banking sector is key to a growing economy and with Sri Lanka working towards becoming an emerging business destination in the South Asian region, the growth recorded by its banking sector would be very advantageous. The country’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by Sri Lanka have all helped the country’s overall economic growth. These factors have also played a key role in the expansion of business/investment opportunities in the country. Given the growth and business potential in the country, supported by a strong banking sector makes Sri Lanka an ideal destination for foreign businesses/investors explore opportunities.
| Article Code : | VBS/AT/23092022/X_1 |