Business

HNB yet again delivers sustainable business performance

Published

5 years ago

2021/08/16

Sahan Weerasooriya

Group PBT Rs 12 Bn; Bank Rs 10.9 Bn

Group PAT Rs 9.8 Bn; Bank Rs 9.1 Bn

Hatton National Bank (HNB PLC) continued to demonstrate resilience amidst volatile conditions, posting a Profit Before Tax (PBT) of Rs 10.9 Bn and a Profit After Tax (PAT) of Rs 9.1 Bn. The Group profits also improved in line, with PBT and PAT at Rs 12 Bn and Rs 9.8 Bn respectively.

The loan book recorded a growth of 8.6% over the past 12 months to June 2021. Despite same, the reduction of over 280 bps in AWPLR over the same period resulted in a 10.6% YoY drop in 1H interest income, to Rs 48.1 Bn. Strong CASA mobilization efforts led to a 27.1% YoY growth in the CASA base which improved to Rs 405.5 Bn as at end of June 2021. This growth together with the low deposit rates, contributed to a 20.4% YoY drop in interest expenses to Rs 25 Bn. Accordingly, Net Interest Income for the first half 2021 exhibited a 3.2% YoY growth to Rs 23.2 Bn.

Fee and Commission income continued its uptrend in 2021 increasing to Rs 4.4 Bn, a 27.7% YoY growth over the corresponding six months in 2020, a period in which considerable disruption to business activities were witnessed. Card and Trade businesses were key contributors towards this growth, while fees from digital banking also improved significantly driven by higher level of adoption.

Mr. Nilanth De Silva Chairman of HNB PLC commented that “The operating environment has continued to be uncertain with a multitude of challenges for the Nation and the Industry for almost two years. The re-emergence of higher numbers of COVID positive patients and the fast spread of the Delta variant, threaten macro fundamentals and industry dynamics. We greatly appreciate the efforts expended by the authorities in rapidly rolling out the vaccinations across the country which is the most sustainable solution in winning the war against COVID. In this backdrop I would like to place on record my sincere appreciation to all our stakeholders for their continued patronage and especially our staff for their untiring efforts and unwavering commitment in serving our valuable clients”.

Bank recorded an exchange gain of Rs 3.4 Bn during 1H 2021 relative to Rs 1.5 Bn in the first six months of 2020 due to the depreciation of the Rupee and lower swap volumes.

The Gross NPA ratio of the Bank improved during the first six months of 2021 to 4.25% in comparison to a deterioration of nearly 50 bps witnessed during 1H 2020. The Bank made an impairment charge of Rs 6.3 Bn for the 1H 2021 compared to the impairment of Rs 9.1 Bn in the corresponding period of 2020. The higher impairment charge in the previous year was largely on account of the rising NPAs and the Sovereign downgrade in April 2020. The Bank reassessed the uncertainties in the operating environment, and continued to improve the Management Overlay in the impairment provisions for this period. HNB’s total impairment against the NPA base remained over 100% as at end of 1H 2021.

The Bank was successful in containing the increase in Operating Expenses to 5.2% YoY, despite the Operating Expenses for 1H 2020 being 6% below the corresponding period of 2019. This together with the healthy growth of 13.3% YoY in Total Operating Income resulted in an improvement of 289 bps in Cost to Income ratio which stood at 37.4% as at end of June 2021.

Commenting on the overall performance, Jonathan Alles, Managing Director /CEO of HNB PLC stated that “HNB has yet again demonstrated resilience, stability and strength in a highly volatile environment. We are proud to have crossed the Rs 1 Trillion landmark in deposits which clearly demonstrates the continued trust and confidence placed in us by our customers. We remain the best capitalized bank among domestic systemically important banks, which has been further bolstered by the Basel III compliant debenture issue which was over-subscribed on day one. Our asset quality continues to be ahead of the industry while our liquidity levels are well above the statutory levels.

This has been possible through our relentless focus on ensuring that we remain on a solid foundation built on strong governance, risk management and compliance, which has enabled us to intensify our transformation efforts on Digitalization, Process Efficiency and People Development in our pursuit to be future ready.”

“As a responsible D-SIB, supporting revival and sustainability of our customers, has also been a key priority for us. We have continued to grant moratoriums to customers under stress over the past two years and have provided necessary working capital financing through CBSL schemes and our own funds. We extended grants to 200 microfinance clients to support recovery of their business operations.”

Alles further commented that “Sri Lanka is at a crucial juncture and a national level action plan is the need of the hour to revive the economy. As a true ‘partner in progress’ for the Nation and its people, HNB has supported National development over a century by financing micro and SME clients, funding infrastructure development projects, facilitating international trade and remittances and having stood by our customers during most challenging times, HNB remains committed to play a pivotal role in rebuilding Sri Lanka.”

In line with the reduction in Corporate Tax Rate to 24% from 28%, the current tax liability and the deferred tax asset as at end 2020 were reassessed. Accordingly, the effective tax rate for the period improved compared to the corresponding period of 2020. PAT of Rs 9.1 Bn translated to a Return on Assets of 1.4% and a Return on Equity of 13.2%. Strong second quarter growth facilitated a 3% expansion in the loan book during the first half to Rs 839 Bn. Total deposits increased to Rs 1.032 Trillion as at end of 1H 2021 recording a growth of 6.7%. The Bank is also among the best capitalized and most liquid in the industry as demonstrated by a Tier I Capital Adequacy Ratio of 15.31%, Total Capital Adequacy Ratio of 18.42%, a Liquid Coverage Ratio of 273.7%, and a Loan to Deposit ratio 81.2%. The CASA ratio also stood at 39.3% as at end of 1H 2021. Total assets expanded by 3.5% in the six months ended June 2021 to Rs 1.337 Trillion, while Group assets grew to Rs 1.417 Trillion.

All Group companies complemented the Bank in enabling the Group to post a PAT of Rs 9.8 Bn and a profit attributable to shareholders of Rs 9.5 Bn.

Accordingly, the Group recorded a ROA and ROE of 1.4% and 12% respectively.

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Business

Sri Lanka pitches Saudi investors for new investment partnerships

Published

17 hours ago

2026/09/29

Sahan Weerasooriya

Saudi and Sri Lankan dignitaries at the National Day reception.

By Ifham Nizam

Sri Lanka is pitching Saudi Arabia for greater investment and deeper trade ties, seeking to attract Saudi capital into new development opportunities while aligning bilateral economic cooperation with the Kingdom’s ambitious Vision 2030 agenda, Ports and Civil Aviation Minister Anura Karunathilaka, chief guest at Saudi Arabia’s 96th National Day celebrations in Colombo, said.

Addressing the National Day reception at ITC Ratnadipa, Karunathilaka said Sri Lanka was keen to identify new areas of economic cooperation with the Kingdom and create fresh opportunities for Saudi investors and businesses.

‘We look forward to creating new opportunities for the people of both countries by working in cooperation with Saudi Arabia’s Vision 2030 and its broader development initiatives, he said.

The minister said Sri Lanka wanted to move beyond its existing development cooperation with Saudi Arabia and build a broader economic partnership encompassing investment, trade and new development projects.

He noted that Saudi Arabia had already made a substantial contribution to Sri Lanka’s development. Since 1981, the Kingdom has provided concessional financing amounting to around Saudi Riyals 1.5 billion for 13 projects in Sri Lanka, supporting key sectors including energy, healthcare, education, drinking water and infrastructure.

Karunathilaka said Sri Lanka appreciated this support and was keen to build on the foundation created by those projects by opening further avenues for Saudi investment.

The minister’s investment pitch comes as Saudi Arabia advances its Vision 2030 programme, with the Kingdom seeking to diversify its economy and develop new international partnerships. Sri Lanka, meanwhile, is seeking to attract investment and expand economic opportunities through closer engagement with international partners.

Karunathilaka also highlighted the strong people-to-people links between the two countries, noting that nearly 250,000 Sri Lankans currently work and reside in Saudi Arabia.

‘They serve as an important bridge between our two countries and contribute significantly to strengthening the people-to-people ties between Sri Lanka and Saudi Arabia, he said.

He expressed appreciation for Saudi Arabia’s continued assistance to Sri Lanka and thanked the Saudi government for the facilities extended to Sri Lankan Muslims undertaking Hajj and Umrah pilgrimages.

Karunathilaka said Sri Lanka looked forward to working more closely with Saudi Arabia to strengthen political relations, broaden investment opportunities and enhance development cooperation.

Yaser Abdulrahman Al-Hazme, Chargé d’Affaires of the Royal Embassy of Saudi Arabia to Sri Lanka, said the embassy remained committed to strengthening bilateral relations by promoting political, economic and cultural communication between the two countries.

‘The embassy of the Kingdom of Saudi Arabia in Colombo has been keen during the past period to strengthen bilateral relations between the two countries by playing its role in supporting political, economic, and cultural communication, Al-Hazme said.

Al-Hazme also highlighted the embassy’s role in strengthening communication between Saudi and Sri Lankan institutions and following up on the interests of Saudi citizens in Sri Lanka.

‘On this precious national occasion, I extend my sincere thanks and appreciation to the government and people of the Democratic Socialist Republic of Sri Lanka for the attention and care given to relations between our two countries, and for the constructive cooperation that has contributed to strengthening the bonds of friendship and partnership between the Kingdom and Sri Lanka, he said.

Business

Sonali Rodrigo earns national recognition from Australia’s finance industry

Published

17 hours ago

2026/09/29

Sahan Weerasooriya

Sonali Rodrigo receiving the prestigious AFG Women on the Move Scholarship at the awarding ceremony held in Melbourne.

Australian finance professional Sonali Rodrigo has been recognised with the prestigious AFG Women on the Move Scholarship, presented by Australian Finance Group (AFG), in recognition of her leadership, industry contribution and impact spanning more than two decades in Australia’s finance industry.

The AFG Women on the Move program is dedicated to supporting and advancing women in the finance and mortgage broking industry, recognising individuals who demonstrate leadership, professional contribution, growth, impact and a commitment to empowering other women. The scholarship is supported by leading industry partners, including HSBC and Thinktank.

Sonali’s career spans more than 20 years in Australia’s finance industry, encompassing senior leadership, financial advisory and governance roles. Alongside her professional responsibilities, she has actively mentored and supported women in their career development, contributed to financial literacy, and helped individuals make more informed financial decisions. Her recognition reflects both her professional achievements and the broader impact of her leadership, particularly in creating opportunities and empowering the next generation of women in finance.

Business

Beyond the crisis: Sectoral paths to durable growth

Published

17 hours ago

2026/09/29

Sahan Weerasooriya

Institute of Policy Studies of Sri Lanka (IPS)

Continued From last Friday

Regional infrastructure improvements beyond the Western Province are essential to close market-access gaps and improve efficiency. The Western Province alone generates 42% of Sri Lanka’s GDP, but the dynamics of such agglomeration may also be highly underestimated. Officially, barely a fifth is deemed ‘urban’ in the province, but IPS re-estimates from the 2024 census using population density and infrastructure access, place the true figure at nearly 61%. The absence of strong secondary cities and industrial clusters outside the province reduces the potential gains from this agglomeration, thereby weakening incentives for firms to locate elsewhere or decentralise operations.

Fiscal incentives can promote decentralised corporate operations by offering tax rebates, lower property taxes, and land access in secondary cities like Kalutara and Gampaha, leveraging the connectivity of Southern and Colombo-Katunayake Expressways. The Hambantota seaport and airport, along with Koggala and Mirijjawela Export Processing Zones, can help develop the Southern Province through geography-based tax concessions.

Immediate measures, such as pricing vehicle entry into Colombo city will support regional agglomeration while tackling the acute problem of city congestion. Adopting a low-cost, technology-anchored free-flow method, similar to the Automated Number Plate Recognition (ANPR) currently used in commercial parking facilities for vehicles entering the city, is one such means. Installing high-mounted overhead ANPR gantries at key arterial entry points can operationalise congestion pricing without disrupting traffic speed. Fee collection can use a system like E-Tags electronic toll collection on expressways, integrated with digital payment gateways like GovPay and LankaQR for dynamic, time-of-day variable pricing.

The renewable energy transition is vital to drive competitiveness, external shock resilience, and green growth. Sri Lanka’s transition to renewable energy (RE) has advanced from a mere aspiration to tangible progress. Yet, the evidence suggests the transition is advancing faster on the generation side than the system built to absorb it. Transmission capacity, market design, financing channels, and digital infrastructure have not kept pace with capacity additions, and this gap is what will determine the pace of the transition through 2030.

Capital spending on transmission must be ring-fenced by legally, operationally, and financially separating the electricity grid (the transmission network) from the rest of the energy sector or by the broader government budget as a protected public investment within the medium-term budget framework. Funding should shift from general budget support to dedicated multilateral facilities, reinforced by sovereign guarantees for eligible borrowing. To safeguard public funds, this must be paired with a clear tariff pass-through mechanism that effectively limits open-ended Treasury exposure.

To build market trust, domestic budget funding should be earmarked for market-design technical assistance, signalling strong policy ownership rather than relying on external donors. Transparency too should be strengthened by publishing a firm implementation timeline in the Budget statement and fully disclosing long-term fiscal commitments from Power Purchase Agreements, capacity arrangements, and ancillary services.

(Concluded)