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.
SLT-MOBITEL donates fourth PCR machine to Matara District Hospital
Recognising the importance to enhance Sri Lanka’s PCR testing capacity to curtail the spread of COVID-19 and to protect citizens, SLT-MOBITEL continues its support by donating yet another vital PCR machine to the District General Hospital in Matara recently.
The donation of the PCR machine valued at over Rs. 5.7 million is part of SLT-MOBITEL’s ‘Sabandiyawe Sathakaraya’ CSR initiative in further strengthening the nation’s healthcare systems and assisting communities in need.
The equipment was handed over to the Deputy Director of the Matara Hospital Doctor Upali Rathnayaka in the presence of Rohan Fernando, Group Chairman, SLT-MOBITEL; Lalith Seneviratne, Group Chief Executive Officer, SLT-MOBITEL; Kiththi Perera, CEO, SLT; Shashika Senarath, CMO, Mobitel along with Regional GM, SLT; Regional Head – Mobitel and Hospital Staff.
Previously, PCR machines were donated to the Base Hospital, Karawanella, District General Hospital, Matale and the University Hospital of the Kotelawala Defense University. SLT-MOBITEL appreciates the support received from all Sri Lankans towards ‘Daana Paaramitha’ which was conceptualized as a platform to further increase community involvement in carrying out relief efforts to support families affected by the pandemic.
Extension of lockdown negatively impacts CSE
By Hiran H. Senewiratne
CSE trading activities commenced yesterday in a lacklustre manner with little share-buying interest and later on became negative following the government’s announcement on the lockdown extension until October 1, stock market analysts said.
The Colombo International Financial Centre (CIFC) at the Port City was set to commence this month and has been delayed until December owing to the current Covid 19 situation. This also affected CSE trading activities yesterday, analysts said.
Consequently, the stock market lost steam yesterday, closing on a negative note as investor sentiment remained erratic due to internal and external environmental factors. Both indices moved downwards or to negative territory despite healthy turnover in the market. The All Share Price Index went down by 46.09 points and S and P SL20 declined by 17.93 points. Turnover stood at Rs. 3.8 billion with two crossings. Those crossings were reported in Expolanka, where 600,000 shares crossed for Rs. 101.1 million, its shares trading at Rs. 158.50 and Sampath Bank one million shares crossed for Rs. 49.5 million, its shares traded at Rs. 49.50.
In the retail market, some companies that mainly contributed to the turnover were; Expolanka Holdings Rs. 1.2 billion (7.4 million shares traded), JKH Rs. 604 million (4.6 million shares traded), Browns Investments Rs. 540 million (58.3 million shares traded) and Hayleys Rs. 204 million (2 million shares traded).
It is said that following two sessions of gains, the indices closed in the red due to price declines in large-cap stocks as investors opted to book modest returns after the recent sharp rally. Stocks such as Expo, LOLC, and JKH, which saw sharp gains in the past two sessions witnessed profit-taking at higher levels and weighed on the momentum throughout the session.
Further, high net worth and institutional investor participation was noted in Sampath Bank. Mixed interest was observed in Expolanka Holdings, Tokyo Cement Company and LOLC Holdings, while retail interest was noted in Browns Investments, Lanka Orix Finance and Industrial Asphalts. During the day 153 million share volumes changed hands in 24000 transactions.
As of yesterday, the current exchange rate of 1 US dollar was equal to 199.607 Sri Lankan rupees. This is an increase of 7.856656 percent (or +14.5401 LKR) compared with the same time last year (17 September 2020), when 1 US dollar equaled 185.067 Sri Lankan rupees.
Lockdown takes toll on Sri Lanka’s manufacturing sector activities
The resurgence of the COVID-19 pandemic in August 2021 has slowed down the manufacturing activities in the country. Accordingly, the manufacturing PMI recorded an index value of 45.1 in August 2021 with a fall of 12.7 index points from the previous month, mainly driven by the decrease in New Orders, Production, Employment, and Stock of Purchases sub-indices. The decline in New Orders and Production, especially in the manufacture of food & beverages, furniture, and textiles & wearing apparel sectors, have mainly contributed to the overall decrease of the manufacturing PMI. Many respondents in those sectors highlighted that their local orders and distribution channels were affected due to the lockdown imposed as a measure of containing the pandemic. Further, many of them also emphasised that factory operations were disrupted due to the spread of the COVID-19 virus among employees. Employment sub-index also declined in line with these developments.
The decrease of Stock of Purchases was in line with the decline in New Orders and Production. Further, the difficulties encountered in placing purchase orders and in settling foreign payments also adversely affected the supply chain of raw materials and production schedules. Many respondents stressed that the continuous increase in the cost of imported raw materials adversely affected their profit margins. Meanwhile, Suppliers’ Delivery Time lengthened at a slower rate in August 2021. The manufacturers cautioned that the uncertainty over the COVID-19 pandemic would continuously hinder the prospects of the manufacturing sector, yet, overall expectations for manufacturing activities for the next three months remained above the neutral threshold.
Services PMI dropped to an index value of 46.2 in August 2021 with the restrictions imposed to contain the further spread of the COVID-19. New Businesses, Business Activity, Employment and Expectations for Activity sub-indices recorded declines. New Businesses decreased in August compared to the previous month mainly with the declines observed in wholesale and retail trade, insurance, real estate, and education sub-sectors. Business Activities across most of the sub-sectors such as, wholesale and retail trade, real estate, insurance and other personal activities reported considerable declines indicating the adverse effects of travel restrictions on their business operations. Nevertheless, transportation sub-sector recorded some improvements solely due to the growth in freight volumes. Moreover, financial services sub-sector also indicated improvements despite the disturbances from travel restrictions. Employment continued to fall at a higher pace as retirements and voluntary resignations exceeded the number of recruitments carried out during the month. Backlogs of Work increased at a higher pace in August along with the reduction in staff availability amid travel restrictions and growing COVID-19 infections of staff. (CBSL)
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