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Sampath Bank FY21 after-tax profit soars by 55%

18 Feb 2022

Sampath Bank reported profit before tax (PBT) of Rs. 16.8 billion in financial year (FY) 2021, up by 50.7% against Rs. 11.2 billion recorded in 2020. Profit after tax (PAT) for the year under review also grew by 55.2% to Rs. 12.5 billion from Rs. 8.0 billion recorded in the previous year. Meanwhile, the Sampath Group too posted significant growth for the current FY, with group PBT and PAT of Rs. 18.8 billion and Rs. 13.9 billion, respectively. All four subsidiaries recorded remarkable performance compared to the previous year. Interest income of the bank fell by 3% to Rs. 85.9 billion in the year under review compared to the previous year. The lower interest rate environment which prevailed for most part of the year, and the weak credit demand resulting from the pandemic-induced economic downturn, were the main reasons for this contraction. Notably, however, the decline in interest income from loans and advances was partially offset by interest income from other financial instruments.  Meanwhile, interest expenses for FY 2021 declined by 19.1% compared to the previous year on the back of a strong improvement in current account savings account (CASA). The bank recorded a growth of 640 basis points (BPS) in its overall CASA portfolio, while recording a decline in relatively costly term deposits. This change in the composition of the deposit portfolio coupled with the lower interest rate regime that prevailed for most part of the year contributed towards lowering interest expenses. Moreover, with the decrease in interest expenses making up for the decline in interest income, net investment income (NII) recorded a growth of Rs. 7.8 billion and reached Rs. 41.7 billion at the end of 2021. Consequently, the bank’s net interest margin (NIM) too reported a healthy increase of 31 BPS over the previous year despite notable pressure on interest income. Net fee and commission income – comprising fees related to loans and advances, credit cards, trade, and electronic channels – increased to Rs. 11.5 billion in 2021 from Rs. 8.5 billion reported in 2020. This significant year-on-year growth was driven by a strong increase in fee-based revenues generated from trade-related transactions, the sizable improvement in credit card business volumes, and higher volumes of online transactions made through Sampath Bank’s digital products in 2021 compared to last year. Fee and commission income received a further boost following the Government’s decision to gradually ease restrictions on the collection of commissions during the year. Sampath Bank’s net other operating income also recorded a significant growth of 37.5% in 2021, on the back of the depreciation of the rupee against the US dollar. With the rupee depreciating by 8.2% against the US dollar during the year, the bank’s net gain from trading increased to Rs. 399 million from Rs. 24.8 million recorded in the last year. The net gain on the derecognition of financial assets, meanwhile, decreased to Rs. 150.4 million from Rs. 423.8 million recorded in the previous financial year. The bank recognised a total impairment charge of Rs. 17.1 billion for 2021 compared to Rs. 11.8 billion in 2020, pointing to a 45% increase, year-on-year. In the current year, the bank recognised Rs. 12.7 billion against loans and advances and Rs. 3.8 billion against other financial instruments. 


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