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HNB reports Rs 12.2 bn PAT for the first nine months



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.

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CSE expected to maintain growth momentum in the wake of brighter IMF bailout hopes



By Hiran H.Senewiratne

The CSE will be able to maintain its growth momentum with IMF bailout prospects brightening this week. Consequently, foreign inflows to the CSE will improve in the future, Head-Market Development, CSE, Niroshan Wijesundara said.

“To date the CSE has been able to register a 14 per cent growth and with the IMF bailout approval we could expect more foreign inflows into the market, Wijesundera told the Island Financial Review.

Amidst these developments the market ended on a positive note at the end of yesterday. Initially there were mild profit- takings but this did not negatively impact the overall performance of the market.

Accordingly, shares edged up in mid-day trade yesterday while investors adopted a wait- and -see approach as the country looked forward to IMF approval on the Extended Fund Facility towards the end of this week.

“Investors are on a wait- and- see approach as the IMF is likely to approve the US$ 2.9 billion dollar loan, market analysts said.

“Selling pressures have eased and now buying sentiments are improving, analysts said.

The ASPI went up by 29.54 points, while the most liquid S&P SL20 index rose by 15.7 points. Turnover stood at Rs 1.8 billion with three crossings. Those crossings were reported in Hemas Holdings, which crossed three million shares to the tune of Rs 199 million, its shares were quoted at Rs 65, Hayleys 738,000 shares crossed for Rs 59.8 million, its shares traded at Rs 31 and JKH 290,000 shares crossed for Rs 42 million, and its shares fetched Rs 141.

In the retail market top seven companies that mainly contributed to the turnover were; Browns Investments Rs 209 million (30.8 million shares traded), JKH Rs 84.6 million (584,000 shares traded), Access Engineering Rs 79.5 million (4.9 million shares traded), LOLC Finance Rs 75.4 million (10.9 million shares traded), Union Bank Rs 62.9 million (6.7 million shares traded), Expolanka Holdings Rs 60 million (420,000 shares traded) and SLT Rs 57.5 million (687,000 shares traded). During the day 98.7 million share volumes changed hands in 20000 transactions.

Top gainers during mid- hours were Commercial Bank, Browns Investment and Access Engineering. Access Engineering is an unusual top contributor and this is because interest had been generated in it after assurances had been given on the IMF deal and there is an assumption that multilateral projects are likely to begin with the IMF restructuring process coming to a close, market analysts said.

Sri Lanka’s growth will be contained at a negative 3 per cent in 2023 after a 12.4 per cent shrinkage in the fourth quarter of 2022 and is expected to turn positive from next year, State Minister of Finance Ranjith Siyambalapitiya said. Siyambalapitiya told reporters on March 18 that Sri Lanka can expect a “positive economy” in 2024.

Yesterday the rupee opened stronger and was quoted at around Rs 330/338 to the US dollar, stronger from Friday’s close of Rs 337/345 to the US dollar, dealers said.

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“Surfing Through the Crisis”



EY Sri Lanka, is scheduled to host a discussion ‘Debt Restructuring Implications to the Financial Services Sector’, on March 22, from 08:45 am to 12:30 pm at The Kingsbury Colombo. The session branching under the theme, ‘Surfing through the Crisis’, is designed specifically for CEOs, CFOs, and CRO of the financial sector, as well as the chairpersons of the Audit Committee and the Board Integrated Risk Management Committee. The event hopes to create value for Sri Lanka’s financial sector amidst the prevailing economic challenges. As the largest service providers to the financial sector in terms of audits, tax, consultancy, and strategy & transaction, EY Sri Lanka feels compelled to assist the financial sector as they navigate the challenges of the economic crisis.

Despite the expected positive outcomes of debt restructuring, the process itself can be painful for the country, financial institutions, debtors and creditors. To the financial services sector specifically it could bring several challenges to capital management, financial reporting, Credit Risk and Liquidity Risk management strategies.

This session will explore these implications, under two technical segments, from Risk Management and Accounting lenses, and the mechanisms required for an effective transition. From a Risk Management perspective there will be several simulations on how it affects the financial institution’s capital and profitability whilst the accounting perspective will include discussions relating to how the debt restructuring process shall be accounted for in line with SLFRS 9 Financial Instruments.

The event will be conducted by Manil Jayesinghe, Country Managing Partner of EY Sri Lanka and Maldives, and Rajith Perera, Partner Financial Accounting Advisory Services EY Sri Lanka. To register for the session, or for further inquiries please contact Nurani Rajapaksha (

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Participants of Raid Amazones 2023 arrive from Paris on SriLankan Airlines



The participants of the adventure trail ‘Raid Amazones 2023’ arrived at Bandaranaike International Airport on SriLankan Airlines’ flight UL 564 from Paris. SriLankan Airlines is the Presenting Partner of Raid Amazones and extended a warm welcome with a traditional flare to the arriving group.

The group boarded the Udarata Menike train from the Gampaha Railway Station shortly thereafter for a scenic journey to Kandy, where the trail will unfold from 22 – 28 March.

Raid Amazones is the world’s only itinerant women’s adventure race. Nearly 250 female athletes will be participating in the 21st edition of the trail in Kandy.

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