HNB records Rs. 6.9 Bn PAT in Q1 2023
Hatton National Bank PLC made a resilient start to 2023, posting a PBT of Rs. 10.7 billion, up 80% YoY, while PAT stood at Rs. 6.9Bn in the first quarter, growing 42% YoY. The Group made a consolidated PBT and PAT of Rs. 11.3 billion and Rs. 7.3 billion respectively.
Chairperson of Hatton National Bank PLC, Aruni Goonetilleke, stated that “Despite the country still reeling from last year’s economic, social and political disruptions, the Bank recorded a solid performance for the first three months of 2023, reflecting our steadfast focus, prudent decision making and agility in the face of changes.”
Relatively high interest rates compared to Q1 2022, facilitated the Bank to report a net interest income of Rs 31.6 Bn during 1Q 2023, reflecting an 87% YoY growth. With higher card volumes coupled with an increased adoption of our digital services, net fee and commission income grew by 31% YoY to Rs 4.2 Bn.
The positive sentiments brought on by the IMF programme and the improved foreign exchange liquidity, gave way to a part relaxation of foreign exchange controls.
This resulted in the Bank recording a net exchange loss of approximately Rs 2 Bn for the quarter due to revaluation losses.
Despite vulnerabilities in the operating income, the Bank was able to maintain one of the best asset quality positions in the industry, with the net stage III loan ratio at 3.8% and stage III provision cover at55.5% as at end March 2023.
Having made significant provisions on account of impairment in 2022, the Bank made a total impairment of Rs 11.4Bn for the quarter.
Jonathan Alles, Managing Director and Chief Executive Officer of Hatton National Bank PLC noted that, “Following an unprecedented year mired in challenges, with the banking sector wrestling with multiple headwinds, we are pleased to see HNB’s performance in the first quarter of 2023.”
“Securing the IMF Extended Fund Facility will bring in the much-needed credibility to restore investor confidence, allowing Sri Lanka to gradually regain access to foreign capital markets. Moving forward, it is imperative that the debt restructuring framework is finalised, ensuring that the stability of the financial sector is safeguarded.”
“In the current backdrop, our prime focus has been on managing asset quality, capital and liquidity levels.”
The effective tax rate for the quarter increased to 36% from 19% in Q1 2022 mainly due to the increase in corporate tax rate from 24% to 30% and introduction of social security contribution levy with effect from October 2022.
Operating expenses increased by 26% in 1Q 2023, driven largely by the impact of the higher inflation compared to the corresponding period of 2022.
Since December 2022, the asset base grew to Rs 1.7 Trillion as at end 1Q 2023.
As a result of low demand for credit due to high interest rates and a stronger Rupee, the Bank’s gross loan book dropped by 4% to Rs 1.0Trillion during the quarter.
On the other hand, Bank deposits continued its growth trajectory, expanding by Rs 29Bn to reach Rs 1.4 Trillion.
The Bank reported Tier I and Total Capital Adequacy Ratios of 11.41% and 14.43%against the minimum statutory requirements of 9.5% and 13.5% respectively.