HNB posts Rs. 20.1 bn Group PAT
Hatton National Bank PLC (HNB) solidified its position as one of the most sustainable and strongest banks recording a well-rounded performance in 2021. Group Profit After Tax (PAT) increased to Rs 20 billion, representing a growth of 47% YoY while Bank PAT improved to Rs 17.3 billion as economic activity picked up during the year.
The monetary policy loosening adopted to spur economic growth post the first wave of the COVID-19 pandemic in 2020 continued to be in place upto August 2021. Although the interest rates increased subsequent to the 50 bps increase in policy rates in August, the average AWPLR for 2021 was approximately 160 bps below the rate for 2020. This resulted in a decline of 5.1% in interest income to Rs 98.6 billion, despite a strong loan growth in the second half of the year. Similarly interest expense reduced by 17.2% to Rs 49 billion, resulting in a Net Interest Income (NII) growth of 10.8% YoY to Rs 49.6 billion.
Commenting on the performance during the year, Chairperson of HNB PLC Aruni Goonetilleke stated that “2021 was a test of endurance and agility as the COVID-19 pandemic continued to disrupt lives and economic activity. During the tumultuous year, our colleagues around the country, led by our Managing Director/CEO Jonathan Alles and the Management Team have focused on protecting the interests of shareholders, while ensuring the wellbeing of colleagues, supporting our customers and showing solidarity with our communities”.
“I am pleased to note the overall robust performance of the HNB Group during 2021, delivered through sustainable growth and profitability, improved asset quality as well as strong capital and liquidity. The Group was also successful in driving digital adoption through future ready products and services. I wish to place on record my sincere appreciation for the entire Hatna family for their commitment and dedication during testing times, our valued customers for their continuous patronage, our investors and all other stakeholders for their trust and confidence”.
Commenting on the performance MD/CEO of HNB PLC Jonathan Alles said, “Humanity has faced the crisis of a generation and HNB has demonstrated remarkable resilience against this backdrop. Our journey over the past 133 years has been through many peaks and troughs . We have continuously strengthened our risk management, compliance and governance, which has helped us overcome challenges. This is testament to our strong and stable performance”.
“HNB has continued to extend support to revive livelihoods. We are pleased to note that many customers have been successful in getting back on their feet as moratoria extended has reduced from 40% of our loan book to 9% as at end of December 2021. Currently the moratoria outstanding is only in the tourism sector, with concessions extended to other sectors ending in 2021.
The relaxation of travel restrictions by many countries and high vaccination rate in Sri Lanka augurs well for the tourism sector”.
“The road ahead of us will be challenging as Sri Lanka is currently at a crucial juncture. However, we see great potential in many areas such as tourism, agriculture, education, healthcare, IT, KPO and BPO as sustainable avenues of foreign exchange earners for our nation, in addition to encouraging remittances from migrants.”
Profit Before Tax (PBT) amounted to Rs 19.8 Bn, a 31.5% YoY increase from the PBT reported in 2020. The total effective tax rate for 2021 was at 28.9% as the income tax rate reduced to 24% from 28% as well as due to reversals of excess provisions from previous years. Resulting PAT of Rs 17.3 Bn generated a ROA of 1.3% and a ROE of 12.1% respectively.
Robust growth in the last two quarters of 2021 led to a gross loan book growth of 14% during 2021, to Rs 929 Bn. On the funding side of the balance sheet, deposits grew by 11.1% YoY to Rs 1.1Trillion.
With industry leading Tier I and Total Capital Adequacy ratios of 14.53% and 18.16% respectively, HNB is very well capitalized. Liquidity levels also remain strong with Liquid Asset Ratios at 28% and Liquidity Coverage Ratio at 208% against the regulatory requirements of 20% and 90% respectively.
All Group Subsidiaries complemented the Bank’s results as the Group recorded a PBT of Rs 23.1 Bn, a 31.1% YoY increase compared to 2020.