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Asset base crosses Rs. 1 trillion
Sampath Bank Chairman Harsha Amarasekera (left) and Sampath Bank Managing Director Nanda Fernando[/caption]
Sampath Bank stated it recorded a 28% decline in Profit After Tax (PAT), which fell from Rs. 11.1 billion in 2019 to Rs. 8 billion in 2020, the bank noted in a statement issued yesterday (16).
“Despite this 28% decline, it is nonetheless a noteworthy result, against the backdrop of the Covid-19 induced economic slowdown locally and globally,” the bank added.
Meanwhile, the bank registered a Profit Before Tax (PBT) of Rs. 11.2 billion compared to Rs. 15.5 billion recorded in 2019, a decline of 27.9%. The PBT and PAT of the Group for the year ended 31 December 2020 stood at Rs. 11.9 billion and Rs. 8.4 billion, respectively, denoting a decline of 27.2% and 27.6%, respectively.
The Bank's asset base expanded by 15.4% to cross the Rs. 1 trillion mark, reaching Rs. 1.1 trillion as at 31 December 2020, from Rs. 962 billion reported as at end-December 2019. Passing the one trillion mark in total assets in just over 33 years represents a significant milestone in Sampath Bank's journey, as it makes Sampath Bank the youngest bank in the local banking sector to surpass this remarkable landmark, the bank claimed.
The bank registered a Net Interest Margin (NIM) of 3.3% in 2020, which was 116 basis points lower than in 2019. Total Interest Income for 2020 decreased by Rs. 14.9 billion to Rs. 88.6 billion, compared to Rs. 103.5 billion registered in the previous year, reflecting a dip of 14.4%. Total Interest Expenses too reported a decline of 11.6% to Rs. 54.8 billion in 2020, from Rs. 61.9 billion recorded in 2019.
“The combined impact of the lower interest regime and the concessionary interest rates charged during debt moratorium phase I, drove down the Bank’s NII by 18.6% from Rs. 41.6 billion in the previous year to Rs. 33.8 billion in 2020. The bank continued to closely monitor all variables affecting the NII supported by necessary follow up action to prudently manage the same throughout the year,” the bank added.
Sampath Bank reported net fee and commission income of Rs. 8.5 billion in 2020, a decline of 15.7% against the previous year.
Net Other Operating Income recorded a substantial growth of 179.2% in 2020, primarily due to higher realised exchange income and the FCY reserve revaluation gains. These exchange gains are attributed to the 2.2% depreciation of the LKR against the US Dollar. On the other hand, the same reason was behind the exchange losses on the revaluation of forward exchange contracts, which was responsible for the 98.9% decline in the Net Gain from Trading compared to the previous year.
Therefore, while the bank’s Net Other Operating Income increased to Rs. 3.5 billion in 2020 compared to the Rs. 1.2 billion reported in 2019, the Net Gain from Trading declined to Rs. 24.8 million for 2020 compared to the Rs. 2.2 billion recorded in 2019. The total exchange income meanwhile reported only a marginal decrease of Rs. 1 million in the year under review in comparison to the previous year.
Moreover, the Net Gain on De-recognition of Financial Assets was Rs. 423.8 million in 2020, as opposed to the Rs. 113.7 million reported in 2019, a year-on-year (YoY) increase of 272.8%.
Due to all these prudential measures taken by Sampath Bank, impairment provision against Stage 1 and Stage 2 loans for 2020 increased by 15.8% compared to 2019.
Owing to the significant increase in Stage 3 loans (Rs. 10.7 billion) during 2019, the bank had to make higher impairment provisions against the Stage 3 loans in that year. However, the bank did not require higher impairment provisions against Stage 3 loans in 2020 as it did in 2019, owing to the fact that the Stage 3 loan growth was only Rs. 6 billion during the year under review. Consequently, impairment charges against Stage 3 loans in 2020 decreased by 33.1% compared to the previous year.