Pan Asia Banking Corporation PLC reported a remarkable performance for the year 2021 to report a pre-tax profit of Rs. 4,034 million and a post-tax profit of Rs. 3,075 million with growth rates of 42% and 50%, respectively, while demonstrating resilience amidst challenging macroeconomic conditions. The bank’s performance was characterised by strength and resilience, despite heightened uncertainty due to the impact of the Covid-19 pandemic.
The bank’s profit after tax (PAT) increased, to an extent, due to the application of a lower corporate income tax rate of 24% for tax provisioning in accordance with the Inland Revenue (Amendment) Act passed in Parliament on 4 May 2021 and certified by the Speaker on 13 May 2021, which impacted provisions to compute tax liabilities on a retrospective basis from taxable year 2020/21. The related adjustments positively impacted the bank’s bottom line by Rs. 90 million.
Against the backdrop of the Covid-19 impact on the Sri Lankan economy, the bank’s operating profit before value-added tax (VAT$ on financial services reached Rs. 4,911 million with an increase of 39%, reflecting the excellence in core banking performance and the success of cost containment measures evidenced by improvement in all key profitability matrices which now rank among industry bests.
This feat was achieved even after setting aside sizable provision buffers for the probable deterioration in credit quality due to the Covid-19 pandemic. The bank increased its provision buffers for loan losses during the year, sensibly taking into consideration increased risks and uncertainties due to the Covid-19 pandemic through management overlays.
Apart from the above, the management increased the impairment provisions made on foreign currency exposures to the Government of Sri Lanka significantly by Rs. 719 million, taking into consideration elevation of default risk associated with the Sri Lankan sovereign as a result of downgrading the sovereign credit rating of Sri Lanka by international credit rating agencies. As a result of the above factors, total impairment charge for the year 2021 witnessed an increase of 49%.
Interest income accounted for 89.08% of the bank’s gross revenue in 2021, despite interest income declining to Rs. 18.80 billion in 2021 from Rs. 18.82 billion recorded in 2020. The re-pricing effect of the lending book responding to market conditions, as well as the continuation of regulatory directives on interest rate caps for certain lending products introduced during mid- 2020, granting of new credit facilities and making of new investments at interest rates lower than in the previous year hindered the interest income on loans and advances and other interest-earning assets during the year under consideration.
This led to a reduction in the average interest yield by over 200 basis points (bps). Remarkable credit growth was achieved in all three segments, namely retail, corporate, and small and medium enterprises (SMEs) of Rs. 20 billion (approx.), which offset the pressure on interest income to a great extent.
Meanwhile, under the prevailing low-interest cost regime, the bank managed to reduce the interest expenses by 20.04% to Rs. 9.16 billion in 2021, at a pace faster than the drop-in yields on interest-earning assets. Funding the lending book mainly from short-term deposits and liabilities, increase in Ceylon Association of Shipping Agents (CASA) base to 29.94% in 2021 from 25.16% in 2020 and monetary policy decisions taken by the Central Bank of Sri Lanka (CBSL) since emergence of the Covid-19 pandemic have resulted in the interest cost of deposits and other interest-bearing liabilities continuously declining despite the increase in liability base.
Commenting on the financial performance, the bank’s Managing Director (MD) and Chief Executive Officer (CEO) Nimal Tillekeratne said: “We are extremely proud and pleased to deliver such an excellent performance under the challenging conditions created by the Covid-19 pandemic. This performance has been hard-won on account of a proactive approach to business while leveraging on emerging opportunities in the market in a prudent manner. Despite the losses due to extension of debt moratoriums and prudential risk-based impairment provisioning, the bank has successfully recorded profitability while consolidating customer and investor confidence.”
Pan Asia Bank achieves a post-tax profit of Rs. 3 b
22 Feb 2022
Pan Asia Bank achieves a post-tax profit of Rs. 3 b
22 Feb 2022
Kapruka
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!