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Sunday, 14 March 2010

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HNB Group 2009 PAT exceeds Rs. 4.5b

Hatton National Bank Group posted a pre tax profit of Rs. 6.17 Bn and post tax profit Rs. 4.55 Bn an impressive improvement of 37.5% and 57.8% respectively, over 2008.

Commenting on the exceptional performance Managing Director/CEO of Hatton National Bank PLC (HNB) Rajendra Theagarajah said that the solid contribution from the core banking activities, significant reduction of the Non Performing Advances (NPA) and commendable returns from the subsidiaries are the key success factors.

Main contribution came from HNB (The Bank) which recorded Rs. 5.92 Bn and Rs. 4.35 Bn pre tax and post tax profit, reflecting increases of 23.7% and 35.2% respectively, over the results of 2008.

Despite the challenging macro economic climate and the contraction in loans and advances during the year, the skilful management of margins enabled Net Interest Income (NII) of the Bank to grow by 15% to Rs. 14.6 Bn in 2009. However, Foreign Exchange income witnessed a decline of 21.2% while fee and commission income recorded a decrease of 2.3% over 2008. The cumulative effects of a drop in trade finance business; near static exchange rates and a decline in the forward exchange bookings contributed to the overall drop in fee and commission income and exchange profit.

Investment income re-adjusted during the year, from an exceptional growth and capital gains witnessed as a result of restructuring of subsidiaries in 2008. Thus in 2009, the investment income declined by as much as 59.6% to Rs. 217.4 Mn. Nevertheless, due to the increase in other income by 101.1% to Rs. 1.3 Bn, primarily as a result of provision reversals on account of Kabool Lanka (Pvt) Ltd., and Cross Staff Aquila USD Plus (Aquila) Funds, the total non interest income improved marginally by 0.7% in 2009.

The overall operating expenses for the year increased by a mere 6.4% to stand at Rs. 13.4 Bn, with staff expenses and salaries in particular contributing to the rise. The recently negotiated collective agreement with the Bank Unions came into force during the year, increasing staff expenses by as much as 14.9% due to an upward revision of salaries. However, the Bank continued its efforts towards cost management and productivity improvements. The headcount reduced by 2.1% despite the expansion of the Bank's operations which saw the establishment of 9 new customer centres during the year.

The banks's cost to income ratio (excluding financial VAT) stood at 54.4% in 2009 compared to 54.3% in 2008. Despite the marginal deterioration, the Bank is well positioned to meet its medium term goal of containing the cost of income ratio below 50%.

Despite challenges the Bank managed to reduce its NPL ratio from 6.73% in 2008 to 6.15% by end 2009 as a result of prudent lending policies, aggressive recovery action and recovery made on account of Kabool Lanka (Pvt) Ltd. This is well below the sector average which exceeded 8% in 2009.

The specific provision for loan losses increased in 2009 by 11.7% to Rs. 665.8Mn, however, the Bank's general provision declined as a result of the contraction in loans and advances. The Bank continued to maintain and meet the 1% general provisioning requirement in line with the provisioning direction of the Central Bank of Sri Lanka. The Bank's provision cover (total provisions to non performing loans) was maintained at 52.8% boasting of one of the lowest net NPL figures of 2.9% among local commercial banks.


Seylan Bank records Rs. 543.301 million PAT in 2009

Seylan Bank recorded a Rs. 543.301 million Profit After Tax for 2009 representing an increased of 250% over the previous financial year. During the same period, the Bank's cost-to-income ratio showed a marked improvement decreasing from 75.79% to 67.82%, while the total capital adequacy ratio - under severe pressure during the end 2008 crisis - rose from 8.06% to 11.74%

The Bank's Profit before Tax increased from Rs. 155.241 million in 2008 to Rs. 892.572 million in 2009 thus recording an unprecedented increase of 475%. This is as a result of operating expenses and provisions for loan losses decreasing by 21.05% (Rs. 1.729 billion) and 11.51% (Rs. 284 million respectively as against a drop in net operating income of 11.77% (Rs. 1.275 billion).

Seylan Bank now meets or exceeds the liquidity targets stipulated by the CBSL. These positive indicators have brought a corresponding rise in confidence both in the shareholder and depositors. The share price which returned to pre-crisis levels following the appointment of the new Board of Directors headed by veteran banker Eastman Narangoda, has continued to gain strength as the management implements, at all levels, the wide ranging initiatives set out in the Bank's new strategic plan.

For more than 20 years the Seylan Bank has proudly called itself "The Bank with a Heart" and has worked hard to live up to this credo. The recent global economic downturn, precipitated by a sharp decline in financial markets in late 2008, had a particularly sharp impact on Sri Lanka.

Further compounding the negative impact on the Seylan Bank was the collapse of the Golden Key Credit Card Co. Ltd. which resulted in many of the Ceylinco Group Companies facing a liquidity crisis resulting in those companies defaulting on loans from the Seylan Bank. "By far the year's most significant achievement was restoring the stability and liquidity of the Bank.

Taking advantage of the buoyant stock market we made a public issue of 54,290,000 ordinary shares at Rs. 35 per share in September last year.

The desirability of the issue was bolstered by the aggregate 25% stake taken in Seylan Bank by the two state institutions - Bank of Ceylon and the Sri Lanka Insurance Corporation. The success of the issue clearly demonstrated the recovery of investor confidence in the Bank, being fully subscribed before the closing date," Narangoda added.

Market capitalisation of the Seylan Bank grew 288% in the course of the year from Rs. 1.2 billion at the end of 2008 to a notable Rs.

4.8 billion at the end of 2009.

The Bank now enjoys adequate capital to support the current business volumes as well as its growth plans in the months that lie ahead.


Janashakthi posts 46% growth in profits after tax

Janashakthi Insurance PLC the 3rd largest general insurer in Sri Lanka has recorded an impressive 46% growth in net Profit After Tax reaching Rs. 657 million during the financial year 2009, despite the financial crisis experienced both locally and globally.

The company has attributed its success to the growth of sales despite challenging market conditions, successful cost management, a significant reduction of borrowing and financing costs and a positive achievement in relation to Debtor management.

Chairman of Janashakthi Insurance PLC W.T. Ellawala said, "The cascading effects of the global financial downturn were compounded by the erosion of confidence set off by the collapse of several financial entities in the country.

Insurance companies were directly affected by the negative sentiment, and the collective performance of the industry only grew by 3.7% and reflects the challenging times for the industry.

These challenging macro economic conditions gave us the opportunity to showcase our spirit of resilience making our performance in 2009 indeed noteworthy".

"We moved on with renewed vigour, meeting targets we had set out early last year.

Our strength was endorsed by RAM Ratings, which reaffirmed Janashakthi's BBB + rating as 'reflective of its strong competitive position, improving underwriting results and enhanced investment portfolio", he added.

A sluggish business environment and less disposable income in the hands of the consumer compounded the challenges faced by the industry.

This state of affairs was evident in the marginal growth of 0.4% that our Life insurance business experienced, while our General insurance business reflected a positive growth of 8.5%. The Non-Motor business achieved Rs. 1.2 billion, a 17% growth compared to 2008 while Motor achieved Rs. 3 billion, a growth of 5%.

The Company's Gross Written Premium (GWP) reached Rs. 5.7 billion at 6.3% growth while the revenue was Rs. 5.9 billion at 7.7% growth.

The total assets of company stood at Rs. 10.7 billion while the Company life fund grew by approximately 12% to reach Rs. 3.2 billion.

The Company paid claims amounting to Rs. 2.8 billion, which was 12% higher than 2008.

Its total Gross Written Premium from Life reached Rs. 1.43 billion while the Gross Written Premium for General was Rs. 4.2 billion.


Pan Asia Bank records 73% growth

The Pan Asia Bank has had a record year in 2009, the best since its inception in 1995. Net Profit after Tax was Rs. 388 million, a 73% growth since the previous year. Profit before Tax for the year increased by 58% to Rs. 665 million.

Net Income grew from Rs. 1,443 million to Rs. 1,984 million an increase of 37%. The main contributors were the Bank's core revenue sources, Net Interest income which grew by a pleasing 20% to Rs. 1,282 million and other operating income which grew quite significantly as a result of the Bank taking advantage of the reducing interest rates in the timely liquidation of the Treasury Bond portfolio. Costs were contained to a 19% increase while the Bank also took the opportunity to make provisions on accounts which could impact negatively in 2010.

Provision for loan losses was Rs. 209 million compared with Rs. 95 million last year. Given the difficult economic environment, the different advances portfolios came under pressure and provisions were made accordingly.

Total Assets grew by 14% to Rs. 21,559 million, with Deposits growing by a satisfactory 13%. The low demand for credit due to the uncertainty which prevailed during the year resulted in a decrease in Customer Advances, which resulted in a corresponding increase in Treasury Bills and Bonds.

Both Capital Adequacy Ratio at 16.5% and the Liquidity Ratio at 42% as at the end of the year means that the Bank is in a great position to grow Customer Advances without any pressure, which augers well for 2010 when it is expected that demand will rise quite significantly.

Other performance indicators also showed great progress with Cost /Income ratio improving from 55% to 48%, Earnings per share rising to Rs. 3.51 from Rs. 2.02 and Return on Shareholders' funds growing to 20.86%. All these ratios are among the best in the Sri Lankan banking industry.

The Bank expanded its network of branches with new branches at Kalutara, Malabe and Vavuniya to reach a total of 36 branches at the end of 2009.

The Bank will continue its expansion drive in this year including branches at Chilaw, Jaffna and many other cities in the country.

The Acting Chief Executive Officer, Claude Pieris said 'This year's achievement is impressive under any circumstances and we are proud of the team at Pan Asia. With a Management Team which is being further strengthened and the focus on the different market segments, I am confident that Pan Asia will grow even further in 2010, he said.

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