Sri Lanka’s Seylan Bank records Rs. 2.5 billion in after-tax profit.
The Morning: Seylan Bank closed the nine months that ended on 30 September 2022 with a post-tax profit of Rs. 2,505 million. In the backdrop of the volatile financial landscape experienced in Sri Lanka, described as the “worst since Independence”, the said post-tax profit has once again been seen as “very commendable” by financial analysts.
The net interest income recorded an increase of 63.2% YoY from Rs. 17,068 million to Rs. 27,960 million, for the nine months that ended on 30 September. The bank’s net fee-based income increased by 38.22%, from Rs. 3,270 million to Rs. 4,520 million during these nine months, mainly due to an increase in trade finance and card-related income.
Other income captions comprising net gains from trading activities, net gains from derecognition of financial assets, net gains on foreign exchange transactions and other operating income increased by 37.13% over the previous year, from a net gain of Rs. 1,979 million to a net gain of Rs. 2,715 million during the first nine months of 2022. The increase is mainly from net foreign exchange revaluation gains.
The total expenses recorded an increase of 9.75% during these nine months, from Rs. 10,036 million in the previous year to Rs. 11,015 million in 2022. Personnel expenses increased by Rs. 530 million mainly due to the increase in staff benefits based on a collective agreement. Other operating expenses, depreciation and amortisation expenses too increased by 10.39% due to the increase in prices of purchases and services as a result of higher inflation and local currency depreciation. However, the bank will continue to take relevant measures to curtail costs with various cost initiatives.
The bank recognised a total impairment charge of Rs. 18.8 billion for the nine-month period in 2022 compared to Rs. 6.2 billion reported in the corresponding period of last year, representing a 199.09% increase. The bank increased the impairment provision to capture the impact of emerging global and local economic challenges and the credit risk profile of the customers.
The bank reported a marginal growth of 2.66% in net loans and advances compared to Rs. 453,730 million during the period under review. Its overall deposit base increased from Rs. 488,653 million in December 2021 to Rs. 524,439 million during the nine months ended 30 September 2022, with a growth of 7.32%. The bank’s CASA ratio (current and savings) stood at 30.25%. Further, the bank’s asset base expanded by Rs. 50,223 million to Rs. 657,800 million.
Overall, with the reported performance during the first nine months, the bank’s earnings per share (EPS) stood at Rs. 4.34. The bank recorded a return (profit before tax) on assets (ROAA) of 0.74% and a return on equity (ROE) of 6.44%. The bank’s net asset value per share as of 30 September 2022 was Rs. 91.47 (Group Rs. 94.74).
Seylan Bank remained soundly capitalised, with the key capital adequacy ratios above the regulatory minimum requirements and recorded 10.33% as the total tier 1 capital ratio and 13.43% as the total capital ratio.
The bank’s liquidity ratios are within the statutory limits. The statutory liquid assets ratio (SLAR) of the domestic banking unit and foreign currency banking unit were reported as 20.60% and 23.07% respectively while the bank’s liquidity coverage ratio of all currencies and rupees were reported as 122.92% and 201.26% respectively.
The banks’ asset quality ratios of impaired loan (stage 3) ratio and the impairment (stage3) to stage 3 loans ratio stood at 5.74% and 46.00% respectively.
Sri Lanka’s banking sector has shown great resilience to the challenging economic conditions witnessed in the country at present. A strong banking sector is a pre-requisite to any emerging business destination and Sri Lanka has a similar banking system in place. Sri Lanka is currently working towards becoming an emerging business destination in the South Asian region. The country’s geographical positioning in the Indian Ocean and the many trade agreements and concessions enjoyed by the country have also helped in this aspect. Sri Lanka’s economy has shown great resilience through the years and is once again on the path to recovery after facing challenging economic conditions in the post pandemic scenario. Given the expanding opportunities and the growing business potential in Sri Lanka as well as the strong banking sector, foreign businesses/investors could confidently explore the many business/investment opportunities in Sri Lanka.
|Article Code :||VBS/AT/20122022/AT_2|