HNB Group post tax profits grow 34% to Rs 1.03 Billion

Hatton National Bank (HNB) continues its robust performance by recording a 32% rise in pre-tax profits to Rs 1,498 million in the six months to June 2007.

Commenting on the performance, HNB's Managing Director Rajendra Theagarajah said " We are extremely pleased with such consistent performance which has been sustained during the past ten successive quarters. Our team focus on balancing business growth with profitability, improving productivity, managing costs and enhanced asset quality has contributed towards this performance".

Net interest generated from interest bearing assets has increased by 29% while Non interest income showed a growth of 22%. The six months have also seen the entire operating expense bill of Rs 4.23 bn being comfortably met by Net interest income from core banking activity. Net Income including foreign exchange, commission income and investment income grew by 27% during the six-month period led by a surge in Foreign Exchange trading which grew by 48%.

HNB has maintained reasonable control on expenses with operating costs increasing by 26%. While recognising the impact of domestic inflation on expenses, Theagarajah stressed the need for increased focus on managing cost through better internal efficiencies.

In its quest to improve asset quality, the bank's loan quality has shown steady improvement with two key performance indicators namely NPA % and NPA cover having improved to 6.9% and 73.4% in June 2007. Post Tax profits were Rs 965 mn which is a 25% growth compared to the corresponding period in 2006.

Taxation in the form of financial services VAT has increased by 29% to Rs 613 mn due to a combination of increase in taxable profits and increase in staff emoluments which are added back (excluding retirement benefits). Income Tax too increased by 46% to Rs 533 mn. Taxation will continue to pose a significant challenge to defending future profit targets Theagarajah said.

The Group too has delivered exceptional results with the After- Tax profits recording a 34% increase to Rs 1,026 mn.