Sampath’s Net Interest Income rises by 13.4% during 9-mth period in 2019
View(s):Sampath Bank on Friday announced that its Net Interest Income recorded an encouraging growth of 13.4 per cent for the nine months ended September 30, 2019 over the figure reported for the corresponding period in 2018.
“Commendably, these results are despite slower growth in the loan book, increasing non-performing loans and other external environmental factors that affected the business throughout the review period,” the bank said in a media release.
For the nine months to September, the bank reported an operating profit of Rs. 25.6 billion before impairment charges and taxes, a 5.2 per cent increase over the same period of 2018. However, Profit Before Tax (PBT) for the nine month period dropped to Rs.10.4 billion from Rs.12.6 billion recorded in the corresponding period.
This decline of 17.4 per cent is attributed mainly to higher impairment charges and an almost 50 per cent increase in taxes on financial services.
The bank reported a Profit After Tax (PAT) of Rs.6.5 billion for the period under review, reflecting a decline of 23.5 per cent over the corresponding period in the previous year.
The Sampath Group recorded a PBT and PAT of Rs.10.8 billion and Rs.6.8 billion respectively.
Interest income for the period under review increased by Rs.6.2 billion and stood at Rs.77.7 billion at the end of the 3rd quarter, compared to Rs.71.5 billion recorded for the corresponding period in 2018, a moderate growth of 8.7 per cent which comes amidst low credit growth and higher non-performing loans.
Overall, the bank’s Net Interest Income (NII) increased by 13.4 per cent for the period under review and stood at Rs.30.8 billion thanks to effective fund management strategies and timely re-pricing of assets and liability products. “Further, the decision by the regulator to reduce the SRR from 6 per cent to 5 per cent with effect from March 1, 2019 also had a positive impact on NII. Consequently the bank’s Net Interest Margin also remained broadly stable and stood at 4.45 per cent at the end of the 3rd quarter of 2019,” it said.
A combination of factors beyond the Bank’s control was responsible for the deterioration in the quality of the loan portfolio throughout the first nine months of 2019. As a result, Sampath Bank’s gross Non-Performing Assets (NPA) ratio increased to 6.03 per cent as at September 30 from 3.69 per cent reported as at the end of December 2018.
Owing to the increase in non-performing advances, the overall impairment charge of the bank also increased to Rs.10.3 billion at the end of 3Q 2019 from Rs.8.5 billion in the corresponding period in 2018. However, the impairment charge on individually significant customers decreased by Rs.735 million due to a series of strategic measures taken by the bank to enhance the quality of collateral and assist customers to improve their debt servicing capacity.