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HNB records PAT of Rs. 6.2b

In 2011, HNB managed to grow its pre-tax profits by 15.4 percent to Rs 7.8 b compared to the previous year, while the Group posted a pre-tax profitof Rs 8.5 b recording a growth of 17 percent.The net profit after tax for the Bank stood at Rs 5.6 b recording a growth of 24.8 percent in 2011 despite pressure on margins and significant reduction in investment income as explained above. The Group net profit for 2011 amounted to Rs 6.2 b which represents a year on year growth of 27.6 percent.

During the financial year 2011, Hatton National Bank's interest income recorded a growth of 9.6 percent due to rapid growth in loans and advances, compared to the negative growth witnessed in 2010.

However, growth in interest income did not keep pace with the increase in loans and advances, demonstrating a drop in yields compared to 2010. However, interest cost in 2011increased by 13.9 percent during the same period, despite deposits growing at a slower pace than advances. Hence the Bank's net interest margin narrowed in 2011. This was an industry-wide phenomenon witnessed during the financial year. Accordingly, the net interest income of the Bank grew by 5.5 percent in 2011 compared to 2010.

The Bank was successful in growing its commission income base by more than 32percent during the year with trade income and card commissions leading the way.

However exchange income witnessed a setback during 2011 due to relatively stable exchange rates for the most part of the year. A drop of 49.9 percent was noted in other income due to the absence of capital

gains realised in 2010 from the disposal of investments in Commercial Bank of Ceylon PLC, Distilleries Company of Sri Lanka PLC, Acuity Securities (Pvt) Ltd and Lanka Ventures PLC and the marked to market gains recorded from equity investments in the previous year.

However, the dividend income increased by Rs 200Mn as a result of higher dividend declared by DFCC.

Accordingly, the net income of the Bank for 2011 stood at Rs 21.2 b,which is a 5.2 percent growth from the previous year.

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