Sri Lanka’s Sampath Bank records PAT of Rs. 4.7 billion for Q1 of 2022
The Morning: Sampath Bank announced that it registered a profit before tax (PBT) of Rs. 6.5 billion and a profit after tax (PAT) of Rs 4.7 billion for the three months ended 31 March 2022, indicating marginal growth of 5.3% and 2.9% respectively from the figures reported in Q1 2021, despite a challenging operating environment, and having taken in a substantial impairment provision on loans and investments.
Sampath Bank stated it recorded a total interest income of Rs. 24.9 billion in Q1 2022 compared to Rs. 20.7 billion for the corresponding period in the previous year, reflecting a 20% growth year-on-year. The increase is attributed to the higher interest income from loans and investments resulting from the upward trend in interest rates in Q1 2022 compared to the corresponding period in the previous year.
The Average Weighted Prime Lending Rate (AWPLR) increased by 396 bps from 5.75% reported on 31 March 2021 to 9.71% reported at the end of the reporting period. Meanwhile, the one-year Treasury bill rate increased by 717 bps from 5.11% reported at the end of the corresponding period.
Despite the interest rate hikes observed in recent months, Sampath Bank stated it was able to benefit from lower cost of funds thanks to the higher concentration of CASA in its deposit portfolio. As a result, the bank recorded a marginal drop of 1.6% in interest expenses during Q1 2022 compared to the first quarter of 2021.
The bank’s interest expenses for the first three months of 2022 was Rs. 11.3 billion compared to Rs. 11.5 billion reported for the same period in the previous year. Net interest income increased by 47% in the first quarter of 2022 as a result of the aforementioned factors. Net interest margin also reported at 4.54%, a healthy growth of 93 bps compared to the figures reported at the end of 2021.
Due to the factors mentioned above, the Q1 2022 impairment charge against loans and advances stood at Rs. 4.9 billion compared to Rs. 1 billion recorded in the first three months of 2021, indicating a 404% increase year-on-year.
The Return on Average Shareholders’ Equity (after tax) increased to 15.95% as at 31 March 2022, compared to 11.05% reported at the end of 2021. Return on Average Assets (before tax) stood at 2.13% as at 31 March 2022, as against 1.44% reported for 2021.
Sampath Bank’s total assets reached Rs. 1.29 trillion as of 31 March 2022, up by Rs. 93.5 billion (annualised growth 31.6%) from Rs. 1.2 trillion as at 31 December 2021.
Total Advances grew by 34.6% (annualised) in the first three months of 2022 to reach Rs. 883 billion at the end of the reporting period, from the Rs. 813 billion reported at the end December 2021. The bank’s LKR loan book grew by 15.5% (annualised) during the period.
OSL take:
The profits recorded by Sri Lanka’s Sampath Bank adds to the business/investor confidence in Sri Lanka since a strong banking sector is a pre-requisite in any country that is working towards becoming a growing business destination in the South Asian region. While Sri Lanka’s economy has shown great resilience to external and internal challenges through the years, the country’s banking sector has also shown great resilience. Sri Lanka’s business potential continues to increase with the country’s geographical positioning in the Indian Ocean and the many trade agreements enjoyed by the country also adding to it. With Sri Lanka’s economy on an expansion path, foreign businesses/investors could explore the growing opportunities in Sri Lanka.
| Article Code : | VBS/AT/25052022/Z_12 |