Dubai presence on the cards for HNB
Hatton National Bank (HNB) on the back of impressive growth last year is gearing to establish its presence in the Middle East after it gets the Indian operation off the ground and also works out the Bangladesh operations, according to a top official."We are not looking at any 'physical presence' outside Sri Lanka, because it is very expensive. We are looking at only networking with other countries to bring about our presence and Oman and Dubai are on the cards in addition to India, which we are looking very actively and also Bangladesh," Rienzie Wijetilleke, Chairman HNB told The Sunday Times FT.
He said the bank is exploring joint ventures in these countries. "Establishing branches in those countries are very capital intensive. To venture to India, we need US$ 25 million, which is a large amount. Therefore we are looking at joint venture deals," he explained.
He reiterated that HNB does not believe in establishing branch networks in other countries on their own, because with the current technological environment, it is not 'necessary'.
Wijetilleke berated the current economic environment saying that 2008 has started with the financial sector facing a situation of unpredictable developments with regard to economic policy and prospects. "A particularly disquieting scenario considering the look of focus by the leadership on barriers hindering private sector participation in the country's development and public investment," he has said in his annual review.
He has noted that sectors such as education, health and infrastructure development require substantial investments together with prudent planning."What we currently observe is a diversion to attention to issues which are short-term survival against long-term benefits to the community," he has said.
Wijetilleke explained to The Sunday Times FT that there is no level playing field for the private sector and it is wresting with procedural problems when dealing with the government sector. "The lack of confidence on the policies stops us from investing.
The government needs to recognise that the growth if at all has come from the private sector. We alone have driven this country's economy and its growth for the last so many years," he said.
HNB recorded a pre tax profit of Rs.4,335 million which is a 44% growth over the previous year. Its operating expenses (including provision for bad debts, and bad debts written off) increasing by 19.2%% during the year which is considered satisfactory against an environment where domestic inflation point to point was 18.8%. HNB’s Cost Income ratio (including Financial VAT) stood at an improved figure of 64.3% in 2007 compared to 66.1% in 2006.
Loans and advances grew by more than Rs.27 billion to Rs.161 billion. Approximately 77% of this exposure was to customers in the western province.The bank’s after tax profit too recorded a 36% increase 3,022 million despite a charge of Rs 1,312 million for corporate taxes.