‘Sampath Bank maintains a strong value proposition to all its stakeholders amidst ongoing economic challenges’

The Bank succeeded in raising Rs 10 Bn in Tier 2 capital via a debenture issue in February 2023. Despite the depressing economic outlook in the Country, the issue was oversubscribed – a testament to the investor confidence placed in Sampath Bank and widespread acceptance of the stability and prudent governance of the Bank. The newly obtained capital will enable the Bank to rise above and prevail as one of the Country’s pre-eminent Bank.

Sampath Bank registered a profit before tax (PBT) of Rs 4.5 Bn and a profit after tax (PAT) of Rs 2.6 Bn for the three months ended 31st March 2023, indicating a decline of 30.5% and 44.3% respectively from the figures reported in 1Q 2022. This decline was mainly attributed to the exchange losses recorded during the quarter as a result of the appreciation of LKR by Rs 39 against the USD on its foreign currency reserves. All other income lines recorded performance well above the previous period.

Key highlights of financial results declared by Sampath Bank and the Group for 1Q 2023 compared to 1Q 2022:

Strong NII buttressed by the higher AWPLR.

19% increase in net fee and commission income driven by trade-related operations

As a result of the appreciation of LKR against USD by Rs 39 in 1Q 2023 vs depreciation of Rs 93.75 in 1Q 2022, the exchange income declined by Rs 10.9 Bn.

27% increase in impairment provision on loans and advances.

The high inflationary conditions resulting in 22% increase in operational expenses.

The upward revision in Income Tax rate and the introduction of SSCL resulting in higher tax expenses.

Group’s PBT and PAT for 1Q 2023 was Rs 5 Bn and Rs 3 Bn respectively, reflecting a decline of 27% and 38% respectively.

Fund based income.

Sampath Bank reported a total interest income of Rs 50.2 Bn in 1Q 2023, up by 102% from the Rs 24.9 Bn recorded in the corresponding period of the previous year. The AWPLR moved up significantly from 9.85% at the end of the first quarter of 2022 to 21.4% at the end of the first quarter of 2023. Because of the higher interest rates that existed throughout the reporting period compared to the preceding period, the Bank was able to register a substantial increase in interest income.

Interest expenses too grew in line with the previously indicated interest rate hikes resulting in the Bank recording a total interest expense of Rs 32.1 Bn in the first quarter of 2023, an increase of 183% over the figure reported in the first quarter of 2022. As a result, net interest income increased by 34% in the first quarter of 2023.

However, the Net Interest Margin (NIM) of 5.60% reported at the end of the quarter under review showed a decline of 6 basis points from the figure reported at the end of 2022. The downward trend in AWPLR reported since the end of 2022 was the primary cause of the decline in NIM.

Non-Fund based income.

The Bank’s Net fee and commission income (NFCI) increased by 19% in the first quarter of 2023 compared to the corresponding period in the previous year. NFCI includes income from a variety of sources, including loans and advances, credit cards, trade and electronic channels. First-quarter growth was mainly attributable to the increase in fee and commission income derived from trade and remittance related activities.

Sampath Bank posted a net other operating loss of Rs 4.4 Bn in the first three months of 2023, compared to a gain of Rs 8.7 Bn reported in corresponding period of 2022, denoting a decline of 151%. This was due to the reversal of exchange gain amounting to Rs 4.5 Bn, resulting from the 10.7% appreciation of the LKR against the USD. However, the Bank recorded a net trading gain of Rs 1.7 Bn for the period under review, compared to a loss of Rs 0.4 Bn in the corresponding period of the previous financial year, mainly due to forward exchange contract revaluation gains. On this basis, the Bank’s net exchange loss from foreign exchange operations for the period under review was Rs 2.8 Bn (1Q 2022: A gain of Rs 8 Bn)

(Sampath Bank)