Sampath Bank reported profit before tax (PBT) of Rs 16.8 billion in FY 2021, up by 50.7% against Rs 11.2 billion recorded in 2020. Profit after tax (PAT) for the year under review also grew by 55.2% to Rs 12.5 billion from Rs 8 billion recorded in the previous year.
Sampath Bank’s NIM reported a healthy increase of 31 bps over the previous year despite notable pressure on interest income. The Bank recorded a sizable 35.7% increase in net fee and commission income during the period, primarily driven by cards, electronic channels, and trade-related operations.
Despite the improvement reported in NPL and Stage 3 loans, additional impairment provisions were made as allowance for overlay to reflect potential credit losses due to the COVID -19 related uncertainties. The Sampath Group too posted significant growth for the current financial year, with Group PBT and PAT of Rs 18.8 billion and Rs 13.9 billion respectively. All four subsidiaries recorded remarkable performance compared to the previous year.
Interest income of the Bank fell by 3% to Rs 85.9 billion in the year under review compared to the previous year. The lower interest rate environment which prevailed for most part of the year and the weak credit demand resulting from the pandemic-induced economic downturn, were the main reasons for this contraction.
Meanwhile, interest expenses for FY 2021 declined by 19.1% compared to the previous year on the back of a strong improvement in CASA. The Bank recorded 640 bps growth in its overall CASA portfolio, while recording a decline in relatively costly term deposits. Moreover, with the decrease in interest expenses making up for the decline in interest income, NII recorded a growth of Rs 7.8 billion and reached Rs 41.7 billion at the end of 2021. Net fee and commission income, comprising fees related to loans and advances, credit cards, trade, and electronic channels, increased to Rs 11.5 billion in 2021 from Rs 8.5 billion reported in 2020.
Sampath Bank’s net other operating income also recorded a significant growth of 37.5% in 2021, on the back of the depreciation of the Rupee against the US Dollar. With the rupee depreciating by 8.2% against the US Dollar during the year, the Bank’s Net gain from trading increased to Rs 399 million from Rs 24.8 million recorded in the last year.
The Bank’s operating expenses increased to Rs 20.7 billion in 2021 from the Rs 20.1 billion reported in 2020, denoting a marginal 2.8% increase. Total tax expenses for the year under review was Rs 8.3 billion against the Rs 6.3 billion recorded for the previous year, reflecting a YoY increase of 31.2%.
The increase in VAT on financial services and income tax expense are directly correlated to the increase in profitability for the year.
The Bank recognized total impairment charge of Rs 17.1 Bn for 2021 compared to Rs 11.8 Bn in 2020, pointing to a 45% increase, year-on-year. In the current year, the Bank recognized Rs 12.7 Bn against loans and advances and Rs 3.8 Bn against other financial instruments.