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| Sunday, 7 March 2004 |
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Business |  |
| News Business Features Editorial
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HNB group records significant growth, posts Rs. 1.7 bn profit The bank has been able to declare excellent results for the year 2003 due to the extremely favourable economic environment that prevailed in the country compared to the previous years. The favourable macroeconomic environment resulted in good credit growth and more regular repayments of advances. Increased activity in the property market, enhanced inward remittances and benefits from tourism, prevalence of low interest regime following several rate reductions by CBSL, a record breaking Stock Market and conspicuous improvement in many other areas contributed to the bank's healthy performance. A spokesman for the bank said that the bank's new headquarters' building - the "HATNA towers" which stands for HNB's confidence in the future of this country, particularly the financial sector, brought in very good mileage. Every distinguished visitor including foreign bankers and many important personalities who visited the bank at HNB Towers were fully convinced of the high standards the bank maintain in its financial services and the tremendous value addition it has imparted to its organisation and its stakeholders in recent times. Despite the burden of a heavy investment of over Rs. 5.0bn on this construction, the bank has been successful in posting over Rs. 1.7bn as group profits and that too after making a substantial provision of rs. 1.7bn, mainly on account of a few large non-performing advances. The bank posted a pre-tax profit of Rs. 1,092 mn and a post-tax profit of Rs. 1,008 mn. This is in comparison to the pre-tax profit of Rs. 669 mn and post-tax profit of Rs. 589 mn made during the year 2002. The results reflected a 63% increase in pre-tax profits and a 71% increase in post-tax profits. It was the first time that the bank posted over Rs. 1bn in profits. The spokesperson of the bank said that the improvement in the net interest income and substantial gains recorded in other income were the main contributory factors behind the improved profitability. Bank's fee, commission and other income posted a near Rs. 1bn growth compared to the previous period largely owing to gains made in the trading of government debt securities and quoted equities. The bank also posted significant gains in its foreign exchange income, which recorded an increase of 31%. However, as in the previous year, the bank made significant loan loss provisions during the year largely on account of a few large relationships. The bank's provisions for the period amounted to Rs. 1.7 bn. which was nearly 156% of its pre-tax profits. Nearly 61% of this provisioned amount related to Kabool Lanka (Pvt.) Ltd which is currently undergoing a restructuring program. The spokesperson noted that the Associate and subsidiary companies of HNB also posted very encouraging results during the year. HNB Securities Ltd posted a Rs. 410mn profit after tax, while the bank's insurance subsidiary, HNB Assurance Ltd, posted a Rs. 36 mn profit after tax. The year also saw the Colombo bourse reaching unprecedented heights, and the bank's stock broking subsidiary returned a profit after tax of Rs. 32 mn in after tax profit. The offer of shares of HNB Assurance Ltd, which was concluded during early November 2003, was a phenomenal success with the issue being oversubscribed nearly 1.6 times. In the balance sheet, HNB Group's total assets recorded a 17% growth from end 2002, and its loan portfolio showed a 17% increase. The same period also saw the group's deposits showing a 15% growth. HNB, which has the largest deposit base among private commercial banks, surpassed Rs. 100 bn as at end 2003. The financial sector reforms and the deregulation processes, which the country has been undergoing, have warranted the bank to rethink its medium to long-term strategy. Accordingly, the bank has adopted a new vision to 'provide leadership and nurture the development of the emerging financial landscape'. The bank has also adopted a new corporate identity in keeping with its future aspirations as well as highlighting the importance of customer relationships. "Overall we are extremely happy with these results, which will undoubtedly give us the confidence to embark on new avenues for business within the sector. Although the present times we are passing through is a cause of concern, we genuinely hope that the country will stabilise after April, so that we can assist the revival of the country's development process in a sustainable manner environment" the spokesperson stated. |
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