Business News from Sri Lanka: Volatile economic conditions prevalent in the country and affecting many key economic sectors since the second half of 2018 also continued through 2019, impacting many businesses ‘ financial performance.
In the midst of increasing NPLs, higher loan costs and moderation of loan development, pre-tax Group earnings reported a 10 percent drop over the previous period mainly owing to higher impairment fees, while post-tax revenues struck mainly owing to the effect of the Debt Repayment Levy on RS 383Mn. Notably, post-tax profits from the Bank recorded a larger drop due to the revenue received from the inter-company dividend in the corresponding 2018 period.
Despite the headwinds current in the operating environment, the Bank continued to pursue its strategic projects identified at the start of the year in the fields of CASA development, digital travel, cost efficiency and individuals upgrading, further reinforcing the basis for capturing a bigger element of the medium-term upside of company development.
During the present difficult financial circumstances, the Bank has pursued a careful strategy in extending its advance portfolio, contributing to a slowdown in the development of the credit book resulting in a moderate net interest revenue development of 9%. Due to the increased cost of funds and a higher mix of medium-term funding raised to better diversify the funding base, a higher increase of 21 percent is seen in interest expenses.
While there was moderate growth in credit cards, trade, and deposit-related fee-based earnings, loan-related charges reported a decrease due to reduced amounts and the lack of one-off payments earned from syndication services in the previous period. Net trade losses resulting from the SWAP premium movement are largely negated by the revaluation gains resulting from balance sheet positions accounted for under Net Other Operating Revenue. Compared to high-cost rupee deposits, the Bank continued to benefit from the forex swaps ‘ relatively lower funding costs.
Commenting on the results and achievements, CEO / Executive Director Renuka Fernando said, “All our efforts and focus is on recording improved performance in the second half of the year with focused strategies for better recovery and lower disability provisions. With a cautious approach to growing the asset’s book, we remain committed to delivering our strategic agenda set at the beginning of the year to strengthen our digital capabilities, with the ultimate goal of achieving cost efficiencies, pioneering innovation and challenging the standard of delivering our customers an unparalleled banking experience. We are extremely proud that Global Banking and Finance Review won Best New Fin-Tech Bank Sri Lanka 2019.
