• Bank PAT of Rs. 7.7Bn
• Deposit growth of over Rs. 112Bn
• Demonstrates stability and resilience with capital and liquidity well above statutory minimum levels
Hatton National Bank PLC (HNB) reported Profit After Taxes (PAT) of Rs. 7.7Bn for the first nine months of 2020, while the Group recorded a PAT for Rs. 8.8Bn for the same period.
The monetary easing adopted post the pandemic has led to a 400bps drop in AWPLR since the beginning of the year. The Interest Income of the Bank declined in line with the drop in interest rates to Rs. 79.6 Bn, by 8.7% YoY in comparison to the corresponding period of 2019. Interest Expenses of Rs. 45.8 Bn represented a 7.3% YoY drop from last year, resulting in a Net Interest Income (NII) of Rs. 33.8 Bn which was 10.6% lower compared to the first nine months of the previous year.
The impact of COVID-19 continued to hamper the Net Fee and Commission income which declined by 18.9% YoY to Rs. 5.4 Bn as a result of the restrictions placed on imports, low volume of foreign card transactions, removal of certain charges as part of CBSL initiated COVID relief scheme and low level of economic activity etc. However, the Bank witnessed an encouraging increase in income from digital products and platforms with customers shifting to digital channels under social distancing and health guidelines.
The NPA ratio of the Bank increased to 6.51% compared to 5.91% as at end of December 2019 and 6.4% as at 30th June 2020. However, an exposure of Rs. 11.5 Bn to a State Owned Enterprise, which was classified as NPA in December 2019, was regularized in October 2020. Accordingly, after adjusting for this recovery, the NPA ratio for the Bank would have decreased to 5.06% from the NPA ratio of 6.51% reported for September 2020. The impairment charge for the period increased by 45.6% YoY over the nine-month period to Rs. 11.8Bn. Although the Bank’s policy is to account for impairment for foreign currency denominated government securities based on the ratings published by Fitch Ratings, the Bank recognized a provision of Rs 427 Mn during 3Q 2020, on account of the sovereign downgrade by Moody’s in September 2020, in addition to the provision made in 1Q 2020 due to the sovereign downgrade by Fitch Ratings.
The Bank’s focus on optimizing costs under challenging conditions, enabled a Rs. 1.3Bn decline in Operating expenses with cost to income ratio maintained at 40%, similar to the levels recorded in September 2019.
Accordingly, the Bank recorded a Profit Before Tax (PBT) of Rs. 10.3Bn for the nine-month period, which is a decline of 23.1% YoY compared to the corresponding period of 2019 The removal of Nations Building Tax and Debt Repayment Levy proved to be extremely vital to maintain the stability of the banking sector, especially in the current context. Accordingly, the Profit After Tax (PAT) of Rs. 7.7 Bn represented a drop of 3.8% YoY.
Gross loans grew marginally by Rs. 11.9Bn to Rs. 783.9Bn, in the backdrop of low demand for credit, while the deposit base grew by an impressive Rs. 112.4Bn recording a growth of 13.9% during the year 2020. The CASA base saw a faster growth of 24.8% during the nine months growing by Rs. 70.6Bn to Rs. 355.4 Bn as at end of September 2020. This has contributed to HNB being able to maintain a strong liquidity position during the period with Statutory Liquid Asset (SLAR) and Liquidity Coverage Ratio (LCR) being well above regulatory minimum requirements. Bank’s total asset base expanded to Rs. 1,248.1Bn by 10.9% from December 2019 to September 2020. The Bank also continues to be among the best capitalized banks in the industry with Tier I and Total Capital Adequacy Ratios of 14.69% and 18.33% respectively.
The Group’s Insurance and Investment Banking businesses performed admirably as the HNB Group made PBT of Rs. 12 Bn during the first nine months, which is a 18% YoY drop while Group PAT increased by a marginal 1.2% YoY to Rs. 8.8 Bn. Group level assets rose by Rs. 128 Bn since the end of last year, a 10.7% growth to Rs. 1.3 Trillion.
In recognition of HNB’s efforts with regard to managing the impact of COVID, covering assistance to customers and community; driving transactions through digital platforms; intensified focus on managing risks and upgrading and enhancing digital and technological platforms, the Asian Banker, recently adjudged HNB as the ‘Best Managed Bank in Sri Lanka during COVID-19’, under its awards programme for the year 2020.
In early 2020 HNB was bestowed with the ‘Best Retail Bank in Sri Lanka’ award by the Asian Banker Magazine, for the 11th time. HNB is also the No. 1 Company in Sri Lanka in the latest Business Today Top 30 Company rankings and is listed amongst the Top 1,000 World Banks as published by the prestigious Banker magazine of UK.