Business Times

Rise in net interest margins enhance bank bottomlines in 1Q2010

By Duruthu Edirimuni Chandrasekera

Most Sri Lankan banks have done very well in the last quarter by improving their net interest margins and these institutions are expected to show better profits in the current quarter, analysts said.

“With the exception of NDB and HNB, all other commercial banks which released their results have done well,” an analyst said, adding that this is due to their increase in net interest margins. HNB saw its net profit down 9% to Rs 650 million during the last financial quarter while NDB also saw its net profit drop by 34% to Rs 229 million due to a dip in net interest income of Rs 1,057.2 million against Rs 1,155.7 million in the same period last year.

The Nation’s Trust Bank (NTB), Seylan Bank, Commercial Bank (CB) together with Sampath Bank posted good results during the first three months of this year. NTB saw its 2010 first quarter net profit rise by 19% to Rs 214 million.

Seylan reported a Rs 183.9 million profit in the last quarter against the Rs 43.9 million seen in the same quarter last year. CB saw a Rs 1,107.6 million profit for the quarter ending 31st March against Rs 891.5 million seen during the same time last year.

Analysts noted that in the next quarter NTB and Sampath will record higher income growth as well as some bond trading profits in the next quarter.

Sampath made some Rs 670 million capital gains from LankaBangla Finance Limited, a Bangladeshi non banking finance company which is listed in the Dhaka Stock Exchange on 10 April.

However analysts said that if GSP + is lost, banks whose exposure to the garment and other export related sectors may be substantial could take a large non performing loan hit.

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