Sampath Bank says 1stQ post-tax profit growth negative
View(s):Sampath Bank recorded a post-tax profit of Rs. 2.2 billion in the first quarter of 2019, which it said was negative growth over the corresponding period in 2018, due to several factors.
These including higher impairment provisions, volatile interest rates, currency uncertainty and higher taxes including a Debt Repayment Levy all of which worked against growth in Q1 2019. Over and above this, the economic slowdown also had a domino effect causing a negative impact on the bank’s business expansion strategies.
However in a media release, the bank reported a net interest income of Rs. 10.2 billion for Q1 2019 reflecting a noteworthy growth of 23.2 per cent over Q1 2018, a significant achievement given the challenging economic conditions that prevailed throughout the period.
Meanwhile the Sampath Bank Group reported a group post-tax profit of Rs. 2.1 billion.
“Highly volatile economic and political conditions prevailing in the country affected many key economic sectors since 2018. This trend continued in 2019 as well, undermining the financial performance of many businesses. Consequently, non-performing advances of all banks including Sampath Bank which was on the rise throughout 2018 continued to further increase in Q1 2019 as well. As a result, Sampath Bank’s NPA increased to 4.87 per cent in Q1 2019 from 3.69 per cent reported as at 31st December 2018. Despite the challenging conditions however, the bank was able to control the growth of non-performing advances by taking proactive measures throughout the period,” the statement said.
The bank recorded a total tax charge of Rs. 2.2 billion for Q1 2019 which is 50 per cent of the operating profit before taxes on financial services. “The Government has removed most of the tax concessions previously enjoyed by the banking industry via the new Inland Revenue Act that came into effect in April 2018 and even thereafter continued to introduce new taxes such as the Debt Repayment Levy in October 2018,” it said.