HNB recorded a Profit After Tax (PAT) of Rs 4.7 Bn during the first quarter of 2021 while Profit Before income Tax (PBT) amounted to Rs 5.5 Bn. At Group level PBT and PAT were at Rs 5.9 Bn and Rs 4.8 Bn respectively.
The substantial monetary loosening adopted to revive the pandemic hit economy resulted in AWPLR dropping by nearly 400 bps over the past 12 months. This resulted in the interest income decreasing by 13% YoY to Rs 23.7 Bn. Interest expenses too exhibited a decline of 17.2% YoY to Rs 13.1 Bn driven by strong CASA (current accounts and savings accounts) mobilization. The CASA ratio improved from 36.2% in March 2020 to 39.7% by the end of Q1 2021 as the CASA base grew by 30% YoY to Rs 395 Bn. As a result, the Bank’s Net Interest Income (NII) for the first three months 2021 decreased by 7.2% YoY to Rs 10.6 Bn.
Commenting on the Bank’s results Managing Director / CEO of HNB Jonathan Alles stated: “HNB has demonstrated resilience, strength and stability during a year of unprecedented disruption. We are grateful for the complete trust and support of our customers, investors and other stakeholders throughout this time. I also wish to place on record my deepest appreciation for the unwavering dedication of our staff in continuing to serve our clientele through multiple waves of the pandemic, despite the inherent risks involved. Our top priority during this time was to ensure their safety while supporting customers affected by the pandemic.
“We provided moratoria under three phases while granting working capital finance out of CBSL schemes and our own funds. In addition to the financial assistance provided during the last year, we enhanced our digital proposition to ensure that customers could securely and reliably access all of our services while staying safe from the pandemic. This included introducing many new features on SOLO – our digital payment platform, and the launch of our new Digital Banking App and e-commerce capabilities for SME clients among many others. We are currently in the process of further refining these powerful new services, which will undoubtedly provide greater convenience for all HNB customers in the future.”
Net Fee and Commission income for the first quarter grew by 10.2% YoY to Rs 2.3 Bn as business activity rebounded during the period. The Credit Cards business, Trade and Remittances which constitute a major share of fees performed well despite restrictions on imports continuing to be in place. Other fee sources, which also encompass digital business lines rose by 24.4% YoY.
Exchange rate volatility and movements during the period, led to substantial revaluation gains on swaps and forward agreements. Swap costs were also lower relative to the corresponding quarter of 2020 as swap premiums declined in line with Dollar interest rates. Accordingly, the Bank recorded a net exchange gain of Rs 1.9 Bn which was a 53% YoY improvement compared to Q1 2020. The total dividend income from investments for Q1 2021 was Rs 421Mn compared to Rs 13Mn in the corresponding period of 2020, as dividends declared for the financial year 2019 were paid only in Q2 2020 due to the pandemic.
NPA ratio of the Bank improved marginally to 4.28% as at end of Q1 2021 compared to 4.31% as at end December 2020, as majority of customers who were previously under moratorium commenced repayments since October 2020. The impairment charge for the quarter ended 31st March 2021 was Rs 2.7Bn in comparison to Rs 4.7Bn recorded for Q1 2020. The impairment for Q1 2020 included a charge of Rs 708Mn on account of sovereign bonds mainly as a result of the sovereign downgrade that was effected in April 2020.
“More than a year after the pandemic, it is unfortunate that we are now seeing the most severe rise in COVID-19 cases to date. All of the lessons that we have learned over the past year will be put to the test. While progress has been made in terms of vaccinations, the economic impact of this latest wave of COVID-19 infections will hinge on how effectively we as a nation are able to rally together to control the spread of the virus.
In this crucial moment, as a responsible domestic systemically important bank, as always, we will continue to support our valued customers and play a meaningful role as an essential service provider. We have already enabled all our digital channels, and are also fully geared to support business revival and help rebuild our nation. We request the public to remain calm, adhering to all health and safety guidelines provided and to act with responsibility and compassion towards one another. We also urge the authorities to expand the vaccination programme and in particular seek their support to make vaccination a priority for front line and critical staff across the banking industry,” Alles stated.
The zealous focus on cost optimization facilitated a marginal 1% YoY dip in Operating costs to Rs 5.8 Bn. Cost to Income was hence improved by a commendable 170 bps relative to the comparative period in 2020 to 38% for Q1 2021.
SL youth eligible for employment in Korea, to get the opportunity shortly
The Korean Ambassador to Sri Lanka Woonjin Jeong assured the Foreign Minister that the facilities required for the Sri Lankan youth who are eligible for employment in Korea to travel to Korea will be provided shortly. He was speaking at a discussion on the delays faced by young people who are eligible for jobs in Korea, chaired by the Foreign Minister Dinesh Gunawardena at the Foreign Ministry on 16 June, 2021. State Minister of Foreign Employment Promotion and Market Diversification Priyankara Jayaratne, Secretary to the State Minister of Foreign Employment Promotion and Market Diversification Suntharam Arumainayaham, Chairman Kamal Ratwatte, Director Nimal Thibbatumunuwa and Deputy General Manager Mangala Randeniya of the Foreign Employment Bureau were also participated in the discussion.
The Foreign Minister pointed out that those who have qualified for jobs in Korea have been expecting to leave for jobs in Korea for a long time; however it has been avoided day by day due to the COVID pandemic. The Minister also pointed out that they are under severe mental stress due to this.
The Korean Ambassador to Sri Lanka explained the position of the Korean Government and stated that it has been planned to provide employment opportunities in Korea to all those who are eligible for employment in Korea. He said there is a delay in providing those opportunities due to the COVID pandemic; however assured that he is focussed on sending them to Korea at the earliest available opportunity.
Sterilizer device launched in Sri Lanka
At a time when the Covid-19 epidemic is spreading around the world, you will no doubt be happy to hear that those invisible germs that collect in such a closed environment can now be destroyed by a small device called STERIONIZER introduced to Sri Lanka by ABC Trade & Investments.
This small device has made life easy for many as you can clean your home or any other place (specially closed environment) by plug-in the STERIONIZER.
STERIONIZER system keeps air ducts, air heat exchangers and machinery clean and supplies sanitized air in enclosed areas and each ionizing device is completely maintenance free and connected to a data-bus for supervision and monitoring.
STERIONIZER is priced at Rs. 35,000. Phone 070 3 525 525 or 070 1 853 529 for more information.
Indian assistance to implement solar power project
It is expected to provide financial benefit to low-income households
Measures have been taken to increase the contribution by renewable energy sources to the national power grid by enhancing solar power generation as per the National Policy Framework.A key plan of the Government is to generate solar power by obtaining the contribution of state-owned buildings, places of worship and houses of the low-income families.
It is expected to provide financial benefit to low-income households and to curtail the expenses incurred by the state institutions for electricity, from the project. Steps will also be taken to provide facilities to store solar energy in batteries for the low-income families that are unable to access the national power grid.
The project also includes generating power by installing floating solar panels as a solution to land scarcity. Under the first phase of this, plans have been initiated to generate electricity required for the Parliament centering the Diyawanna Lake as a model project.The Government of India, one of the main stakeholders of Sri Lanka for this project, has entered into a bilateral loan agreement by agreeing to grant a Line of Credit amounting to US$ 100 million through the Export Import Bank of India.The agreement for the Line of Credit signed by the Sri Lankan Government and the Export Import Bank of India was exchanged between Finance Secretary S. R. Attygalle and Indian High Commissioner Gopal Baglay in the presence of President Gotabaya Rajapaksa and State Minister Duminda Dissanayake at the Presidential Secretariat recently.
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