Seylan Bank 1H pre tax profit up 142 percent

Seylan Bank recorded an impressive 1 H performance with a Profit after Tax of Rs 1.02b for the six months ended June 30, 2012. Profit before VAT and Income Tax rose to Rs 2.01b, compared to Rs 832m (before the exceptional VRS costs), a 142 percent growth over the corresponding period last year, a media release from the Bank said.

GM and CEO of Seylan Bank Kapila Ariyaratne

The Bank's strong performance was driven by growth in its core banking operations despite rising interest rates and controlled credit growth. Net Interest income increased by 15 percent to Rs 4,276m in 1H 2012, arising from selective growth in quality advances and effective management of margins. The Bank's portfolio grew by 18 percent (annualised) in the first six months of the year.

Non-interest income increased from Rs 1,171m to Rs 1,237m in the six months of 2012. The main contributor to this was the growth in foreign exchange income which increased by 20 percent over the corresponding period last year.

During the six months under review the bank focussed considerably on controlling its overhead costs. The efforts on improving cost efficiencies have resulted in the improvement of the cost to income ratio to 67 percent, a reduction of six percent from December 2011.

The Bank grew its deposit base by Rs 10.3b despite a fiercely competitive environment and due to sustained and effective recovery strategies was able to reduce the NPA ratio (net of IIS) from 14.2 percent to 12.3 percent.

General Manager and CEO Kapila Ariyaratne said, "These results prove beyond doubt that the business expansion strategies backed by improvement in operational processes and focus on customer service and risk management are beginning to yield the desired results, and now provides us an excellent platform to achieve sustained growth and improved profitability."

During 1H 2012 the Bank opened seven new branches, convenient centres and relocated three branches to more customer-friendly locations. As at June 30, 2012, the bank network comprised of 138 branches/convenient centres and 139 ATMs.

Preparing for future growth, the Bank has planned for a Debenture issue via a private placement for early October 2012. The bank intends to invest on identified key areas which are in line with the banks future growth strategies including new product development, branch expansion, service quality improvement, staff training and development and IT infrastructure.

Seylan Bank Chairman, Mohan Pieris PC said, "We are focused on achieving our Strategic Plan which we formulated in the latter part of last year. We have also taken steps to improve our capital and governance structure for future growth strategies that have been planned."

As a result of the strong half-yearly profits posted, earnings per share was at Rs 6.04 (annualised), while return (profit before tax) on assets and return of equity was at 1.90 percent and 11.50 percent.