Pan Asia Bank 1H'16 pre-tax profit soars 48%

CEO, Dimantha Seneviratne

Pan Asia Banking Corporation PLC increased its pre-tax profit by a strong 48% to Rs. 943.0 million for the six months ended June 30, 2016 (1H'16) from the same period last year on the back of a strong growth in core-banking operations and fee and commission based incomes.

The post-tax profit too followed suit and has increased by as much as 34% year-on-year (yoy) to Rs.604.0 million. The earnings per share rose to Rs.4.10 from Rs.3.08 a year ago.

Core-banking performance

The bank's core-banking performance has been quite strong with net interest income growing by 28 percent yoy to Rs.2.34 billion but the rise in interest expenses exceeded the rise in interest income due to slower re-pricing of the loan book in the rising interest rate market compared to the rate offered for the deposits.

As a result the net interest margin has slipped to 4.11 percent from 4.34 percent in December 2015 demonstrating the pressure on the margins. Nevertheless the maintaining the margin above 4.0 percent is considered commendable amid rising funding cost.

The bank has also managed to expand its gross loans and receivables to customers by an annualized 12.8% or by Rs.5.5 billion during the 1H'16 to Rs.91.8 billion.

Total assets stood at Rs.120.8 billion, recording an increase of an annualized 24% during the 1H. The growth in loans and advances to customers during the 1H has been fully funded through the bank's customer deposit base which has risen by an annualized 15% to Rs.83.6 billion.

However the bank's low cost deposit base declined due to both active promotion of medium term deposits and the shift in savings account balances to fixed deposits seeking higher returns in a rising interest rate environment. Commenting on the performance Pan Asia Bank Director/ Chief Executive Officer Dimantha Seneviratne said the 1H financial results is a clear testament of the bank's ability to deliver consistent performance irrespective of the economic cycles.

"We have throughout been proactive in identifying the market developments. This enabled us to make early inroads in to certain segments and this has been the hallmark of our successful performance.

We would continue to remain futuristic and make forward looking decisions to turn opportunity in to realities.