HNB records over 9 b income for 1st quarter
First quarter results recently published on Hatton National Bank
shows an impressive performance by the Bank recording an income of Rs
9.68 billion., a growth of 14 percent compared to the corresponding
period last year, ample testimony for the Bank's resilience on the face
Despite unfavourable global as well as local economic conditions the
Bank continued to perform well in the first quarter of 2009.
HNB's operating profit from ordinary activities before tax and
financial VAT surpassed Rs 1.7 billion mark, recording a growth of 10
percent over 2008. Operating Profit after tax for the period is Rs.
763.1 Million, Which is a 2 percent growth from Rs. 751.3 million in
The Banks' provision for the Financial VAT and Income tax for the
first quarter was Rs. 937 million. High taxation on financial services
continues to be a major obstacle for the growth in the industry.
Net interest income grew from Rs. 3.0 billion. in first quarter 2008
to Rs. 3.4 billion. in the first quarter 2009 recording a growth of 15
This was primarily facilitated by the growth in the Banks' interest
earning assets and the effective management of the net interest margins.
The operating expenses of the Bank for the 1st quarter recorded an
increase of 15 percent the Bank will continue to focus on expenditure
management during rest of the year.
Due to contraction in the loan book during the first quarter of 2009
there was a reversal of Rs. 47.6 million. in the general provision after
meeting the statutory general provision requirement of 1 percent
stipulated by the Central Bank of Sri Lanka. However the specific
provision saw an increase of Rs. 49.0 million. or 34 percent during the
This includes certain prudential provisions made on exposures over
and above the provisional guidelines of the Central Bank of Sri Lanka.
In the wake of slow down in the local banking industry and stringent
credit policy being adopted due to unfavourable market conditions with
focus on asset quality and risk management, Banks' loans and advances
contracted by 5 percent from Rs. 170.8 billion. to Rs. 162.2 billion. in
first quarter of 2009.
The net NPA ratio recorded a marginal increase from 2.3 percent as at
December 2008 to 3.5 percent as at end March 2009.
However, the increase in the NPL ratio is relatively lower than the
industry averages and the Bank boast of a very healthy NPA cover of
During the first quarter the Bank's deposit base grew by an
impressive Rs. 5.0 billion, demonstrating the confidence the public has
placed on HNB during times of uncertainty in the financial sector.
The asset base which stands at Rs. 261.0 billion. too recorded an
increase of Rs. 5.7 billion. during the same period.
HNB Group income too has increased by 13 percent to Rs. 10.1 billion.
with post tax profits marginally decreasing by 4 percent to Rs. 711.8
million due to the adverse market conditions affecting the performances
of Bank's subsidiaries which are into stock brokering and investment
However the Banks insurance subsidiary HNB Assurance PLC recorded a
impressive post tax profit growth of 12 percent to reach Rs. 15.9
million. Investments made in the two exchange houses namely Majan
Exchange LLC in Oman and the Delma Exchange based in Abu Dhabi are still
in the infancy stage and yet to contribute to the group profit.
The units have shown promise and further plans have been laid out to
move in to other countries with higher expatriate concentration.
Bank has also planned to expand the network by 10 - 12 branches
during the year, which includes 4 branches in the Northern and Eastern
With the proposed expansions and the existing branch network in the
North and the East the Bank is well positioned to actively participate
in the post conflict development activities.
During the period the Bank increased the ATM network by installing 13
new ATMs taking the total to 273 and has planned to increase the number
to 300 by end of the year.
The Bank was also recognised as the best retail bank in Sri Lanka for
the second consecutive year by the prestigious Asian Banker Magazine in