HNB Group posts profit after tax of Rs. 11.6 Bn
Hatton National Bank PLC posted a profit before tax of Rs 12.4 Bn and a profit after tax of Rs 10.5 Bn during the nine months which ended September 2022 while the Group recorded a profit after tax of Rs 11.6 Bn.
Chairperson Aruni Goonetilleke commented that “our performance under extremely turbulent conditions demonstrates the confidence placed in us by our customers, the robustness of our business model and the focus and expertise of our team in navigating through intensified uncertainties and reiterate our unwavering commitment on delivering long term value.”
The interest income of the Bank grew by 86% to Rs 134.9 Bn, primarily due to an increase of over 12 percentage points in average AWPLR during the period, in line with tight monetary policy measures adopted by the Central Bank. Accordingly, the net interest income of the Bank increased by 100% YoY to Rs 71.1 Bn in the first nine months up to September 2022.
The net fee income recorded a growth of 65% YoY to Rs 11.0 Bn largely due to higher trade and card income, compared to a subdued 2021. In addition, the Rupee devaluation by over 80% during the period resulted in an exceptional exchange income of Rs 16.8 Bn. The 110% increase in total operating income to Rs 99.7 Bn was negated by the 438% increase in a total impairment charge to Rs 60.3 Bn for the nine months. This included an impairment charge of Rs 41 Bn on account of the investments in foreign currency-denominated government securities held by the Bank.
HNB managed to curtail the increase in operational expenses at 27% YoY in the backdrop of a 70% YoY inflation and an 80% depreciation in the Rupee.
The Bank’s asset base expanded by 20.2% to Rs 1.6 Tn during the nine months up to September 2022 while gross loans and advances rose by 13.1% to Rs 1.1 Tn. Total deposits recorded a growth of 25.1% to Rs 1.3 Tn during the nine months. HNB’s local currency deposits grew by 17.3% to Rs 993 Bn while the overall balance sheet growth was partly impacted by the significant devaluation of the currency.
Bank’s Tier I capital ratio and total capital ratio stood at 11.31% and 14.36%, against the regulatory requirement of 9.50% and 13.50%, respectively.
MD Jonathan Alles stated that “the severe economic crisis the country is faced with today, has resulted in a myriad of challenges for the entire banking sector. The banking sector has continued to support customers in need by extending capital and interest moratoria since 2019.”
“While macro-economic uncertainties continue, we note the progress made by Sri Lanka concerning its discussions with both public and private creditors. As the backbone of the economy, banking sector stability would be crucial to ensure the revival of Sri Lanka. As such, we strongly believe that the interest of the banking sector would be safeguarded to ensure that the country reaches its development goals under the IMF programme.”
“Despite the ongoing challenges, HNB has stood out in terms of its capital, liquidity, asset quality and efficiency levels. While we remain strong and stable, we will also ensure that our systems, processes and people are future-ready to deliver an enjoyable experience to our customers”.
HNB Group recorded a PBT of Rs. 14.0 Bn and the Bank accounted for 90% of the Group PAT of Rs. 11.6 Bn for the nine months. Group PAT saw a drop of 13.2% compared to the previous year, due to the significant increase in impairment charges on account of investments in foreign currency-denominated government securities as well as loans and advances. Group Assets increased by 19.5% to Rs 1.7 Tn as at end of September 2022