Seylan Bank posts Rs. 1 b PAT in 1H, 2013

Despite a challenging external environment, Seylan Bank turned in an impressive performance with Profit before Income Tax reaching Rs. 1,483 million for the six months ended June 30, 2013. Profits after Tax reached Rs. 1,002 million, a 4.32% increase compared to the Rs. 960 million reported in the corresponding six-month period in 2012. The interim financial statements have been prepared in accordance with LKAS/SLFRS.

Due to the sharp and sustained drop in gold prices and its resultant impact on the pawning base, the sluggish credit off take and industry-wide pressure on interest margins, Net Interest income decreased by 3% to Rs. 4.33 billion for the six months ended June 30, 2013.

Fee and commission income increased by 28% from Rs. 763 million to Rs. 973 million with the bank increasing its focus on trade finance and fee income generating products and services.

During the six-months under review the Bank also focused on cost containment. As a result of many effective initiatives, personnel and overhead cost was contained to a 3.4% increase during 1H, 2013.

Despite competition the deposits base grew from Rs. 146.7 billion to Rs. 155.6 billion. Net Advances portfolio grew from Rs. 124.7 billion to Rs. 130.5 billion during the six months under review, despite lower than expected credit demand and the impact of lower gold prices on pawning related activities.

The Bank improved its asset quality through effective recovery and rehabilitating efforts. This enabled the Bank to significantly reduce its Gross NPA (net of IIS) from 12.99% in December 2012 to 11.15% as at end June 2013.

The Bank successfully implemented a Core Banking System upgrade in February 2013.

This will bring about significant cost efficiencies through process improvements to the Bank in the coming years. The upgrade will also facilitate many additional functionalities enabling better product and service delivery to customers.

Chairman of Seylan Bank, Nihal Jayamanne PC said, "The Bank has posted yet another strong performance recording growth in profit after tax in 1H, 2013, these results provide us an excellent platform to achieve sustainable growth."

Subsequent to the successful Rs. 2 billion debenture issue, the Bank's total Capital Adequacy ratio stands at 15.24% at the end of Q -2, 2013, one of the highest in the local banking industry.

General Manager and CEO of Seylan Bank, Kapila Ariyaratne said, "Forward looking strategies and commitment to continuous improvement have made it possible for us to maintain our growth momentum despite a challenging external environment.

We will continually invest in identified key areas which are in line with the Bank's future growth strategies including new product development, branch expansion, service quality improvement, staff training and development and IT infrastructure to provide customers the high level of personalised and friendly service that they have now come to expect from us and increasingly reward other stakeholders too for their valued association with us."

As a result of the impressive 1H, 2013 performance, Earnings per share stood at Rs. 2.93 while Return (profit before tax) on Assets and Return on Equity stood at 1.53% and 10.36%.