Continues its support for business revival through debt moratoria and disbursements
A resilient business model and continued focus on sustainable growth was reaffirmed as Hatton National Bank PLC (HNB) reported Rs 12.2Bn in Profit After Tax (PAT) for the nine-month period ended September 2021. HNB Group recorded Rs 13.4Bn in PAT for the period.
The loan book recorded a sound growth of 15% during the past 12 months with an increase of Rs 118Bn. The Prime Lending Rate (PLR) picked up following the upward revision in policy rates in August 2021. However, the average PLR between January to September this year was approx. 300 bps lower than the average rate which prevailed in the corresponding period of 2020. As a result, Interest Income for the nine months declined by 8.9% YoY to Rs 72.5Bn.
Similar trend in average cost of deposits combined with zealous focus on CASA which grew by Rs 52.9Bn to Rs 436.6Bn as of September led to interest expenses being lower by 19.3% YoY to Rs 37Bn. Resulting Net Interest Income exhibited a 5.2% growth to Rs 35.6Bn. The CASA mobilization efforts also facilitated total deposit growth just under 15% YoY over 12 months since September 2020.
Aruni Goonetilleke, Chairperson of HNB commented that “I am pleased to note that HNB has continued to display resolve and stability within a context of rapidly changing macro dynamics. I wish to place on record my sincere gratitude to our loyal customers for their continuing patronage, every member of Team HNB for their commitment and dedication in navigating through multiple challenges and all our stakeholders for their continuing support and trust.”
“As Sri Lanka enters a path of recovery, we believe that necessary measures are being taken to address macro concerns, create stability and a conducive environment for the banking sector to optimize their support to sustainable economic growth. HNB remains very committed to supporting our clients and to the development agenda of the Country”.
Despite periodic disruptions to business activity in 2021 owing to lockdowns, the Bank was able to grow Fee and Commission income by 22.8% YoY to Rs 6.7Bn. Cards and Trade Business demonstrated strong growth along with digital channel driven fees and commissions.
The depreciation of the Rupee relative to last year resulted in net exchange gains, largely stemming from on balance sheet positions and FCBU earning revaluations, increasing by Rs 2.8Bn over the corresponding period, a substantial portion of which is reflected in ‘Other Operating Income’.
Consistent focus on credit quality enabled HNB to improve its Gross NPA ratio to 3.92% by September 2021 compared to 4.31% as at end Dec 2020. Stage III loans as a percentage of total loans also improved by 43 bps over nine months to 2.97%. The Bank made an impairment of Rs 11.2Bn for the nine months, including a significant management overlay, considering the uncertainties stemming from the COVID 19 pandemic. The impairment charge also included an additional provision due to the sovereign downgrade by Moody’s from Caa1 to Caa2. Accordingly, the Stage III Provision coverage ratio improved from 48.4% in December to 54.2% by September 2021.
Commenting on HNB’s performance MD/CEO Jonathan Alles stated that “the banking sector of Sri Lanka has demonstrated resilience over a prolonged period of extreme uncertainty. As a domestic systemically important bank, HNB has been in the forefront recording superior asset quality, capital and liquidity levels while delivering sound and sustainable returns.”
“The pandemic has also proven the need to be agile and future ready. Our continuous focus on business transformation has been a key factor which has enabled us to stay ahead. During the year we have enhanced the capabilities of our digital platforms and this would continue to be a key focus area as we proceed our journey to enhance value delivered to all our stakeholders”.
Alles further stated that “since the Easter Sunday attacks in 2019 we have continued to support our customers through debt moratoria, and extended concessionary rate financing and grants. Despite the impact of lockdowns, we are pleased to note that majority of our customers have shown signs of recovery. With economic activity returning to near normalcy, we hope that most of the sectors would be operating close to capacity levels and customers would commence repayment to reduce their debt burden. This would in turn enable us to focus on more needy sectors of the economy”.
The Bank’s Cost to Income ratio improved by over 225 bps to 37.84% although Operating Expenses rose by 7.8% YoY to Rs 18Bn due to total Operating Income exhibiting strong growth of 14.2% to Rs 47.5Bn.
Profit Before taxes (PBT) rose by 43% YoY to Rs 14.7Bn. The total effective tax rate reduced from 40.84% for the Nine months ending 2020 to 33.17% as 24% in lieu of 28% was applicable as the Corporate Tax rate for the current period as well as for the deferred tax component. The resulting PAT of Rs 12.2Bn generated a ROA of 1.23%.
Strong growth in the third quarter fueled nine-month gross loan growth of 10.7% to Rs 901.7Bn. HNB also continues to be a preferred Bank for clients with Rs 52.9Bn CASA mobilized during the period, which boosted the deposit base by 9.5% to Rs 1.06 Trillion. The CASA ratio improved by over 150 bps since December 2020 to 41.2%. Total assets expanded by 4.7% to Rs 1.35 Trillion. Tier I Capital Adequacy ratio remained strong at 14.43% against the regulatory requirement of 8.50%, while the Total Capital Adequacy ratio improved further in 2020 to 18.22% due to the Rs 7Bn Basel III compliant debenture issue in the third quarter.
HNB Group Companies were also profitable during the nine-month period, complementing the Group PBT and PAT of Rs 16.4Bn and 13.4Bn respectively while profit attributable to the shareholders rose to Rs 13Bn. Group assets grew by 4.6% since 2020 to Rs 1.43 Trillion by end September 2021.
HNB is rated AA- (lka) by Fitch Ratings and has been ranked among the Top 1000 Banks in the World over five consecutive years by the acclaimed UK based “The Banker Magazine”. HNB was once again reco.
ComBank partners with PayHere to offer Q+ users a unique eCommerce experience
The Commercial Bank of Ceylon has partnered with PayHere, Sri Lanka’s largest Aggregated Internet Payment Gateway Service, to offer users of its Q+ Payment App a unique, user-friendly and secure eCommerce experience.
Commercial Bank customers can now conveniently pay for their purchases via the Q+ app to over 3300 registered PayHere Online Payment Service enabled merchants. The Bank’s Credit, Debit and Prepaid Card holders who pay through Q+, the fastest-growing QR app in the country, will not be required to tap in their card details as this information is already stored on the app, the Bank said.
Payments to PayHere merchants via the Q+ Online Pay facility will enhance customer convenience as the transaction will only require the entering of users’ mobile numbers registered with the app. Disbursements via Q+ require authentication using a static PIN which ensures the safety and security of transactions, making the Q+ App more secure than a normal card as the customers’ sensitive data is not transmitted to merchant websites.
TAMAP drives Stakeholder Forum for Good Agriculture Practice
The inaugural meeting of the GAP Stakeholder Forum was held with the support of the Technical Assistance to the Modernisation of Agriculture Programme (TAMAP) at the Department of Agriculture in Peradeniya on 17 November 2021. Prof. Udith K Jayasinghe, Secretary Ministry of Agriculture, graced the occasion as the Chief Guest.
The Good Agricultural Practices (GAP) programme, introduced by the Department of Agriculture in 2016, was a promising step taken to minimise adverse impacts of agriculture on the ecosystem and human health while meeting steadily rising demand for food. Although the programme had an encouraging start, the overall conversion of farmers to implementing GAP remained low. Over the past six years, 1500 farmers registered as GAP producers out of the 1.8 million farmers in Sri Lanka. To align with the current policy of the Sri Lankan Government to improve ecological friendliness of farming, it is important to transform all production units towards GAP farms.
Studies showed that to achieve this goal, the GAP implementation strategies needed to be updated and infused into the mainstream agriculture, facilitating a quick transformation of the current approach towards a macro-level system. Therefore, the requirement for a rapid strategizing of such an approach followed by periodic review of GAP performance arose. This initiated the need for a stakeholder forum.
The key purpose of the forum is to provide a common platform for key stakeholders to meet in formulating a strategy to mainstream SL GAP, propose a way forward for implementation such recommendations, and to regularly review program performance and adopt remedial action to achieve GAP objectives.
Prof. Udith K Jayasinghe, Secretary Ministry of Agriculture who chaired the Forum in his opening statement commented, “GAP programme has emerged a solution to challenges faced by Sri Lankan agriculture today to improve safety of users and ensuring good environmental performance. Reinforced by facilitating legislation and approved national standards, GAP programme provides a strong foundation towards addressing above concerns.”.
Over forty participants were present at the forum, representing the various stakeholder groups comprising producers, distributers, SL GAP team, academics, and market players. Ms D. S. Ratnasinghe, Addl. Director (Agribusiness) and Dr W. M. W. Weerakoon, National Coordinator outlined the status of the GAP programme and the challenges faced.
The deliberations during the forum were broken down into five main areas: Technical, financial, institutional, and social problems faced by GAP stakeholders on maintaining production, supply, product quality, and consumer trust. Gaps in technology transfer and adoption, marketing and quality control measures and means for increased rate of adoption and GAP farm certification; Gaps in current GAP process and procedures, user friendliness and applicability; Future technological needs towards increasing production, productivity, product quality and ecosystem sustainability; and Policy needs for increased adoption of GAP to mainstream GAP into national agriculture agenda.
Prof. G. Pushpakumara, Faculty of Agriculture, University of Peradeniya and Ms Jayantha Ilankoon, ADG (Dev) moderated the forum through group activity, outcome presentations and strategic discussions on the way forward.
Concluding the forum, Dr Nihal Atapattu, stated, “TAMAP, along with the European Union that provided the funding support is very pleased to have assisted to launch several interventions that would promote recognition of GAP as a premier means of strengthening Sri Lankan agriculture in sustainably meet requirements of the domestic and export markets. TAMAP expects that the Stakeholder Forum launched today will be a milestone event in advancing GAP to achieve its potential in Sri Lanka”.
HNB’s commitment to expand e-commerce and digital payments wins Daraz award
HNB has been recognized by Daraz for exceptional contribution to its growth, in an independent endorsement of Sri Lanka’s leading private bank’s commitment to expand e-commerce and digital payments throughout the country.
The award, for the ‘Card Base with Highest Overall Growth’, was presented to HNB at the ‘Daraz Payment Partner Performance Awards 2021’. HNB, which ranks among Daraz’s best banking partners, recorded the highest growth on total payment volume, buyer engagement and total transactions month-on-month, for both credit and debit cards for the year 2020-2021.
“This award is an important validation how the local economy – both businesses and consumers – are benefiting from HNB’s cohesive programme to drive greater adoption of e-commerce and digital payments,” HNB Head of Cards, Gauthami Niranjan said. “These efforts are particularly significant at present, given how digital and contactless payments can assist in reducing the spread of the pandemic and support the Bank’s and the country’s vision to transform Sri Lanka to a cashless economy.”
Currently, HNB Cardholders enjoy multiple offers on Daraz, Sri Lanka’s leading online marketplace, a wholly-owned subsidiary of global e-commerce giant, the Alibaba Group. These include zero-interest instalment plans up to 48 months with attractive discounts for HNB Credit and Debit Cards and 10% off site-wide on Daraz for all HNB Credit Cards on purchases made during Saturdays. In addition, HNB tied up with Daraz for its 11:11 and Black Friday sales, which provided HNB Cardholders access to a range of offers and massive discounts.
HNB has been a pioneer in Sri Lanka’s banking industry in the digital banking and digital payments space. These include the launch of digital wallet and payment app, HNB SOLO and introducing Asia’s first-ever fitness-linked savings product in the form of the HNB FIT Savings Account.
With 254 customer centres across the country, HNB is one of Sri Lanka’s largest, most technologically-innovative banks, having won local and global recognition for its efforts to drive forward a new paradigm in digital banking. HNB has a national rating of AA- (lka) by Fitch Ratings (Lanka) Ltd. The bank was also ranked among the World Top 1,000 Banks list compiled by the prestigious UK-based Banker Magazine for five consecutive years. HNB was also declared Best Sub-Custodian Bank in Sri Lanka at the Global Finance Awards 2020.
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