Sampath Bank reports marginal drop in 2019 post-tax profit
View(s):Sampath Bank’s total operating profit before impairment and taxes grew by 1.1 per cent to Rs. 34.8 billion in 2019 compared to Rs.34.4 billion reported in 2018.
“However, profit before tax (PBT) for the year 2019 dropped to Rs. 15.5 billion from Rs. 18.3 billion in 2018. This decline of 15.5 per cent is attributed mainly to the 39 per cent increase in taxes on financial services and the 12 per cent increase in impairment charges. Taxes on Financial Services for the year increased to Rs.6.7 billion, mainly due to the newly introduced debt repayment levy. Total debt repayment levy for the year exceeded Rs. 2.2 billion,” the bank said in a media release.
The bank reported a Profit after tax (PAT) of Rs.11.2 billion for the year under review, reflecting a slight decline of 8.2 per cent over the previous year. The group recorded a PBT and a PAT of Rs. 16.3 billion and Rs. 11.7 billion, respectively.
Low credit growth, higher non-performing loans, Easter Sunday terrorist attacks, the Presidential election and pressure on lending rates/interest rate caps affected the Sampath Bank’s NII growth during 2019.
Despite the challenges however, the bank’s NII increased by Rs.3.5 billion during the period under review to reach Rs.41.6 billion as at end December 2019. This 9.3 per cent growth was the result of effective fund management strategies adopted by the bank, coupled with timely re-pricing of assets and liability products right throughout the year. “It is noteworthy to mention that the Rs.12.1 billion worth of Tier 1 capital raised during the year enabled the bank to release some of its larger high-cost deposits. This helped to reduce the cost of funds and created a positive impact on NII. The reduction of SRR from 7.5 per cent to 6 per cent with effect from November 16, 2018, followed by a further reduction to 5 per cent with effect from March 2019 also contributed towards improving the NII,” it said.
Overall interest income for the period under review recorded an increase of Rs. 5.7 billion to reach Rs. 103.6 billion compared to Rs. 97.9 billion recorded in 2018, which was a moderate growth of 5.8 per cent.
“Stressed economic conditions that prevailed throughout the year 2019 continued to affect business cash flows of many businesses in the country. As a result, the bank experienced significant increase in customer defaults and delayed repayments. To address this issue, the bank continued to take strategic measures such as rescheduling/restructuring existing facilities to suit the customers’ debt-servicing capacity coupled with improvements to the pre credit evaluation and post credit monitoring protocols. This helped to manage the increasing trend in the NPL to some extent towards the latter part of 2019. Nonetheless the bank’s NPL ratio at end December 2019 increased to 6.37 per cent from 3.69 per cent recorded in 2018,” the bank statement said.