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HNB records Rs 6.2 Bn PAT

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Hatton National Bank PLC (HNB) recorded a Profit Before Tax (PBT) of Rs 9.8 Bn during the first quarter of 2024 while Profit After Tax (PAT) amounted to Rs 6.2 Bn. At Group level, PBT and PAT were at Rs 11.2 Bn and Rs 7.4 Bn, respectively.

The substantial monetary policy loosening adopted by the Central Bank of Sri Lanka to revive the economy, resulted in a drop in AWPLR by 50% from 21.40% to 10.69% during the 12-month period up to March 2024. This caused interest income to decline by 20% YoY to Rs 60.2 Bn.

Interest expense declined at a slower pace of 13% YoY to Rs 38.2Bndue to the lag effect in repricing deposits. The Bank also provided sizable interest rebates to support the most vulnerable sectors of the economy. As a result, the net interest income declined by 30% YoY during 1Q 2024. Chairman of Hatton National Bank, Nihal Jayawardene, stated that “we are pleased to note that the Country is making strong and steady progress in its recovery path as reflected in macro-economic indicators. I believe that the external debt restructuring programme would also be concluded soon, safeguarding the interest of the banking sector, enabling it to bolster the country’s growth prospects.”

Bank’s total non-interest income for the quarter was Rs. 2 Bn compared to Rs 2.5 Bn in the corresponding period of 2023, largely due to the appreciation of the rupee during the quarter and reversion of trade tariffs to pre-crisis levels. HNB recognised an incremental impairment charge of Rs 1.4 Bn during the quarter, compared to Rs 11.4 Bn provided during the first quarter of last year backed by the Bank’s continuous focus on supporting customers to revive their businesses and the improvement in economic conditions.

HNB’s total operating expenses increased to Rs 9.9Bn from Rs 8.9Bn as staff costs and other expenses increased. Total effective tax rate stood at 51% in 1Q 2023 resulting in a total tax of over Rs 6.5Bn for the quarter. Acting Chief Executive Officer of Hatton National Bank, Damith Pallewatte, stated that “HNB’s performance during the quarter was largely in line with movement in macro variables.”

“The significant reduction in interest rates resulted in interest margins being narrowed while the appreciation of the rupee led to our on-balance sheet positions being revalued. However, we believe that with AWPLR being under 10% currently, the demand for credit would improve going forward, positively contributing towards the net interest income.”

The Bank’s asset base stood at Rs 1.9 trillion as at end of March 2024 with Group assets at over Rs 2 trillion. The Bank maintained its gross loans at over Rs 1 trillion with deposits over Rs 1.5 trillion.

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