HNB Group records sustainable growth in 2024

Hatton National Bank PLC (HNB) posted robust overall performance in the year 2024, demonstrating marked improvement on all fronts. Group Profit After Tax (PAT) improved to Rs 44.8 Bn in 2024, up from Rs 23.6 Bn in 2023 while Bank’s PAT increased to Rs 41.3 Bn, compared to Rs 20.3 Bn in the previous year.

Commenting on the performance in 2024, Nihal Jayawardena, Chairman of HNB PLC stated that “with the improving economic landscape in 2024 providing the impetus for renewed business confidence and financial sector expansion, HNB leveraged its strong foundation to prove its leadership in the local banking industry. HNB’s solid capital position, strong liquidity, and digital-first strategy, enabled the Bank to respond swiftly to emerging opportunities for business expansion, culminating in to an exceptional financial performance in 2024. I would like to extend my heartfelt gratitude to all our stakeholders for their continuous support and for the trust and confidence placed in us during good and bad times”.

Bank recorded an impressive 11.3% YoY growth in loans and advances during 2024. Despite the growth in loan book, interest income of the Bank experienced a YoY decline of 21.6%, primarily due to the gradual relaxation of monetary policy, which led to the average yields on loans and government securities dropping by nearly 45% in 2024 compared to 2023. However, the decrease in net interest income was moderated towards the latter part of the year, as the reduction in interest expenses outpaced the drop in income, owing to lower rates and the focus on driving CASA deposits.

Net fee and commission income of the Bank saw a notable YoY increase of 12.7% to Rs 17.8 Bn. Growth in fee income was driven primarily by the growth in transactional volumes across digital platforms and card services compensating for the drop in commission income from trade services. Trade commission dropped by over 25% YoY despite notable growth in trade volumes as the tariffs continued to adjust downwards reflecting higher foreign currency liquidity amongst the banks. The appreciation of the Sri Lankan rupee against the dollar resulted in an exchange loss of Rs 2.9 Bn.

The gradual improvement of the economic environment supported by the concerted efforts on rehabilitation and recovery efforts led to much improved asset quality. This resulted in positive movements in both stage 2 and stage 3 loans. Nevertheless, on a prudent basis the Bank recognised a total impairment of Rs 11.5 Bn on loans and receivables. Accordingly, the Bank’s Net Stage 3 ratio improved to 1.88% from 3.76% in the previous year, while the Stage 3 Provision Coverage ratio improved to 74.4%, from 57.5% in 2023.