Financial Times

HNB continues rebound, 1H group profit up 40%
Hatton National Bank (HNB) has continued its comeback with a 22 percent rise in pre-tax profits to Rs 676 million in the six months to June 2005 while group profits rose 40 percent to Rs 807 million.

Notable performances by HNB Securities Ltd. and HNB Stockbrokers Ltd. contributed to the overall group net profit after taxation of Rs 648 million during the period. “We are extremely satisfied with the consistency in which two successive quarters have recorded such exceptional performance,” declared HNB’s Chief Executive Officer Rajendra Theagarajah.

“The strategic redirection of the bank in balancing business growth with profitability, improving productivity, managing costs, and focusing on enhanced asset quality has been taken to heart by staff at all levels within the bank which has seen the entire network working towards these goals.”

A bank statement said the 22 percent rise in profits has been achieved with an asset growth of just four percent during the first half of 2005. Effective balance sheet management coupled with controlled growth has contributed towards improved return and productivity of the bank’s asset base, it said. The bank’s commitments and contingencies has also shown a 26 percent drop.
Net interest generated from interest sensitive assets increased by 31 percent. The first half of 2005 has also seen the bank’s total operating expenses entirely covered by net interest income from core banking activities.

Net income of the bank which includes foreign exchange income, commission income and investment income in addition to net interest income, grew by 14 percent during these six months.

HNB has maintained its “tight leash” on costs with operating expenses increasing by a mere eight percent during the period, the statement said. Improved procurement procedures, advantage of economies of scale and pooling of common processes are some factors that have contributed towards effective cost management in the bank, it said.

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