Corporate

Sampath Bank records a Rs. 2.5 Bn pre tax profit

Samapth Bank continued its growth momentum in the third quarter 2009 as well, recording impressive results for the nine month period ended 30th September 2009. The Pre-Tax Profit of the bank for the period, crossed the Rs. 2.5 Billion mark and stood at Rs. 2,569.7 Mn, as against Rs. 1,986.5 Mn for the same period previous year, recording a Pre-Tax Profit growth of Rs. 583.2 Mn or 29.4%. The Post Tax Profit of the Bank grew by 32.0% to Rs. 1,330.2 Mn an increase of Rs. 322.5 Mn over the last year's profit of Rs. 1007.7 Mn, for the same period.

Sampath Group, which consists of the Bank and its 6 Subsidiary Companies, has also posted a Pre-Tax Profit of Rs. 2,684.3 Mn, as against Rs. 2,111.5 Mn for the same period previous year, recording a Pre-Tax Profit growth of Rs. 572.8 Mn or 27.1%. Post tax profit of the Group for the nine month period ended 2009 amounted to Rs. 1,383.5 Mn, a 26.3% growth from Rs. 1,095.1 Mn in the corresponding period last year.

Prudential management of the Bank's Assets and Liabilities helped to enhance the net interest income from Rs. 4,756 Mn in the first three quarters of 2008, to Rs. 5,554 Mn in the same period 2009, which reflected an impressive growth of Rs. 798 Mn or 16.8%.

Despite a moderate growth in the fund base of the Bank during the period, which was very much in line with the industry trends, in that the average balances of interest earning assets and interest bearing funds of the Bank increasing by 6.63% and 4.96% respectively over the corresponding period last year, the Bank was able to achieve this significant growth of 16.8% in Net Interest Income, primarily through improving the net interest margin(NIM). The net interest margin rose from 4.68% at the end of third quarter 2008 to 5.17% at the end of third quarter 2009, which was also a further improvement over the second quarter of 2009.

A combined effect of several internal and external factors facilitated this improvement in NIM.

The foremost internal factor was the Bank's success in managing its fund base and the interest rates structure there on in a prudent and professional manner through the ALCO. In addition, the steps taken to recover the already classified non performing loans and advances and close monitoring of borderline cases helped to enhance the net interest income. The reduction in the Statutory Reserve requirement on rupee deposits from 10.0% to 7.00% was one of the significant external factors which facilitated this improvement and the resultant benefit of this factor on Net Interest Income is estimated to be around Rs. 292.5. Mn. Total other income of the Bank rose from Rs. 1,849.8 Mn in the first nine months of 2008 to Rs. 2,706.7 Mn in the same period 2009, reflecting a growth of Rs. 856.9 Mn or 46.3%. Foreign Exchange income, one of the main sources of other income, rose from Rs. 202.5 Mn in the first nine months of 2008 to Rs. 635.3 Mn in the same period 2009, recording an impressive growth of Rs. 432.8 Mn, as against the negative growth of Rs. 375.3 Mn recorded in the same period 2008.This significant growth in foreign exchange income was mainly from the foreign exchange dealings.

HNB's Post Tax Profit up by 25%

Recently released 3rd quarter group results of Hatton National Bank PLC boasts of an impressive 25% growth in the post tax profit amounting to Rs. 2.65 bn. from Rs. 2.17 bn. in the corresponding period of 2008. The growth was driven by the improved performance of banking activities and contributions from HNB Assurance PLC and Sithma Development (Pvt) Ltd. and Acuity Group.

The Bank's profit after tax during the period recorded an improvement of 5% to Rs. 2.68 bn. from Rs. 2.56 bn. in the corresponding period of 2008.

Prudent and timely decisions taken by the Bank has enabled to maintain healthy growth of 17% in net interest income despite volatile interest rates and negative growth in advances. Exchange and commission income declined in the face of reduction in the trade business coupled with the stable exchange rates prevailed during the period.

Non interest expenses grew by 16% mainly due to the increase in staff costs and setting aside of an additional provision in respect of staff retirement benefit from December 2008 due to the Bank adopting SLAS 16 (revised 2006) on Employee Benefits.

The Bank has also made a substantial investment in a new IT platform and expanded the ATM network by installing 17 new machines during the last nine months to enhance customer convenience and value added services. HNB today has a network of 278 ATMs.

Net Non Performing Asset ratio (NPA) increased to 3.67% from 2.27% in December 2008 a trend we have been observing throughout the industry in the recent past. This trend is expected to reverse with the recent reduction in interest rates and the revival of the economy.

Value added taxes on financial services and Tax on profit on ordinary activities increased by 15% and 35% respectively increasing the effective financial VAT and Corporate Tax rates to 26.6% and 36.2%. Increasing taxes coupled with pressure on interest margins would remain the main challenge for the banking sector in the coming years.

Although the Bank loan book contracted during the last 9 months, Bank's total assets grew by 5% mainly from the investment in Governments securities which grew by Rs. 13.7 bn. (58%). With the recent change in the interest regime analysts predict an increase in demand for credit which would drive loan growth in future.

Significant growth was achieved in both savings and fixed deposits which grew by Rs. 5.9 bn. (9%) and Rs. 7.7 bn. (7%) during the first nine months of the year, a good testament to the confidence placed by the public on the Bank.

During the first 9 months this year the Bank opened three customer centres including one in Northern Province and will be looking at opening another 5 Customer Centres in 2009.

Haycarb continues growth in 1H 2009-10

A strong focus on value added products that command better prices in international markets have enabled Haycarb PLC, the Hayleys Group's activated carbon business, to post impressive results in the first half of the financial year.

According to figures released to the Colombo Stock Exchange this week, the Haycarb Group comprising of manufacturing operations in Sri Lanka, Thailand and Indonesia, achieved a net profit of Rs. 294 million for the six months ending September 30, 2009, more than double the profit made in the corresponding period of last year. Revenue grew 14 percent to Rs. 2,555 million, while profit before tax increased nearly two and a half times to Rs. 353 million, the company said. Profit attributable to equity holders of the company increased by a similar ratio to Rs. 268 million.

Haycarb Managing Director Ananda Hettiarachchy attributed the company's performance to its success in operating its factories at optimal capacity by strategizing purchases as well as imports of coconut shell charcoal, its principal raw material, and to the higher representation of value-added carbons in its product mix.

He said higher local output had been made possible by improved local and imported raw material supply, while the company's plant in Indonesia had improved on its performance, and its Thailand factory had maintained its contribution.

The Group's earnings per share stood at Rs. 9.04 as at 30th September 2009, from Rs. 3.78 at the end of the second quarter of 2008-09.