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| Sunday, 7 September 2003 |
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| News Business Features Editorial
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HNB stages successful revival Hatton National Bank (HNB) recorded a pre-tax profit of Rs. 707 million during the first half of 2003, compared to Rs. 210 million during the corresponding period of 2002. The post-tax profit was Rs. 576 million compared to Rs. 175 million for the corresponding period last year. The results reflected a 236 per cent increase in pre-tax profits and a 229 per cent increase in post-tax profits. The bank after a difficult period during 2001 and the early part of 2002, was able to achieve a successful revival through good credit growth, enhanced returns from investments and subsidiaries, rationalisation of operations and recovery of many NPAs. Its net interest income reflected a 35 per cent growth, through a significant drop in interest cost. Other income posted substantial gains mainly on account of increases in investment and fee income. The bank made substantial capital gains from secondary market operations in government debt securities, while the heightened level of activity in the stock market also enabled it to post substantial gains from its portfolio investments. However, HNB's operation expenses showed a 27 per cent increase mainly due to a 36 per cent increase in staff emoluments. The main cause of the latter was the offer of a Voluntary Retirement Scheme (VRS) which cost the bank Rs. 124 million, which saw the staff being pruned by 70. It continued making substantial provisioning on account of its NPA of which the bulk was accounted for by a few relationships. During the period, a provision of Rs. 685 million was made, a 133 per cent increase over the previous year. In the balance sheet, HNB's total assets recorded a six per cent growth from end-2002, and its loan portfolio grew by seven per cent. The deposits base grew by seven per cent, largely stemming from the growth in the savings base which recorded a nine per cent increase despite the prevalence of low interest rates. The bank was also successful in raising two billion rupees through debentures in July which served to boost its capital adequacy. HNB group results showed a Rs. 814 million profit before tax and a Rs. 788 million profit after tax during the period. In the group accounts, both HNB Securities Limited and HNB Stockbrokers (Pvt) Limited showed healthy results with the former registering a profit after tax of Rs. 200 million and the latter a profit after tax of Rs. 14 million. The low interest rates and the high level of activity at the Colombo bourse were attributable for their performance. HNB Assurance Limited posted a Rs. 12 million profit after tax while Smart Development (Pvt) Limited recorded a five million rupee profit. Sithma Development (Pvt) Limited continued to yield losses mainly due to high financing charges. On the basis of the performance upto the half-year, HNB is hopeful of surpassing the one billion rupee net profit mark for the year. However, much would depend on the conditions in the environment, particularly revival of the presently stalled peace process. |
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