HNB Group posts Rs.1.27 b PAT in Q1
First quarter 2013 continued to be challenging for the banking sector
with demand for credit slowing down further, nevertheless HNB recorded a
growth of 36% in interest income to Rs.13,683 million in Q1 2013 from
Rs.10,035 million in Q1 2012 due to 11% year-on-year (YoY) expansion in
its loan book and relatively higher rates of interest.
Interest expenses too increased by 46% from Rs. 5,187 million in Q1
2012 to Rs. 7,584 million for Q1 2013 on account of the increase of Rs.
34 billion in the deposit base, which is a growth of 11% YoY and the
higher rate of interest compared to the previous period and the shift
witnessed towards high yielding deposits.
As a result, HNBs Net interest income witnessed a growth of 26% for
Q1 2013 as against the corresponding period of 2012.
The net income from fees and commission recorded an improvement of
10% despite, slowdown in foreign trade during the period. However, the
Bank incurred a loss of Rs. 1,022 million, compared to the gain of Rs.
805 million made in 2012 on account of the revaluation of forward
contracts and swaps.
The gain made in 2012 was largely on account of the significant
depreciation of the Rupee witnessed during Q1 2012 while exchange rate
volatility in the current period resulted in the loss due to revaluation
of forwards and swaps. HNBs other operating income grew by Rs. 1,210
million during the first quarter of 2013 from a loss of Rs. 379 million
during the first three months of 2012 due to exchange gains and losses
from non-derivative assets and liabilities.
The fluctuation in the exchange rates and the change in composition
of the bank's non-derivative assets and liabilities, resulted in the
bank posting an exchange gain in the current period compared to 2012.
With the implementation of SLFRSs the bank replaced the CBSL time
based provision with an impairment loss computed based on incurred loss
model and accordingly the Individual impairment on individually
significant loans improved by 27% while Collective impairment on
individually insignificant loans increased by 119% for the Q1 2013.
Operating expenses for Q1 2013 increased by 12% primarily due to salary
revision to all grades of staff, fair valuation of the liability under
Employee Share Benefit Trust under SLFRS and increase in general
Accordingly, the profit before tax of HNB for Q1 2013 was Rs. 1.69
billion compared to Rs. 1.82 billion recorded in Q1 2012 while profit
after tax stood at Rs. 1.16 billion compared to Rs. 1.23 billion.
Group pre-tax profits stood at Rs. 1.81 billion compared to Rs. 1.91
billion while the Group post-tax profits was Rs. 1.27 billion compared
to Rs. 1.32 billion as at end of Q1 2012.
Acting CEO, HNB, Jonathan Alles said he was happy with HNB's
performance in what could be termed a somewhat flat first quarter.
He said that HNB had made good progress in technology and process
enhancements and that the execution of the 2013/15 strategic plan is on
The launch of mobile banking is one such initiative in 1Q2013 and is
in line with HNB's strategy to advance in technology to maximise
The price of the voting share of HNB improved by 13% during the first
quarter 2013, with the price at Rs. 167.30 as at end of the first
quarter 2013 compared to Rs. 148.00 at the end of December 2012 while
the non-voting share recorded a gain of 17.2% to Rs. 131.80 from Rs.
112.50 at the end of 2012.
HNB was awarded as the 'Best Retail Bank in Sri Lanka' for the sixth
consecutive year by the prestigious Asian Banker at the 12th Excellence
in Retail Financial Services Awards held on March 21, 2013.