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Sampath Bank PLC Chairman Harsha Amarasekera and Sampath Bank PLC Managing Director Nanda Fernando[/caption]
Sampath Bank recorded a Profit Before Tax (PBT) of Rs. 6.1 billion in Q1 2021 compared to Rs. 3 billion in Q1 2020, denoting a growth of 101%, while Profit After Tax (PAT) increased by 83% to Rs. 4.6 billion from Rs. 2.5 billion recorded in the first quarter of 2020. Resilient performance of all business lines along with the improved credit quality helped bolster Sampath Bank’s performance in the first quarter of 2021.
The Sampath Group also registered significant growth in Q1 2021, as evinced by the improvement in both PAT and PBT in the first quarter of the year. The group reported a Rs. 5.1 billion PAT and a Rs. 6.7 billion PBT for the period under review, denoting a growth of 90.7% and 103.5%, respectively, compared to the figures reported for the same period in the previous year.
Net Interest Income (NII) declined by 7.7% during the period under review to Rs. 9.2 billion from Rs. 9.9 billion recorded in the corresponding period in 2020. The drop in the NII is attributed to the prevailing low interest rate environment. However, the bank continues to proactively monitor all variables that are likely to impact the NII to ensure a sustainable return.
Overall, interest income for the period under review decreased by Rs. 3.8 billion to Rs. 20.7 billion compared to Rs. 24.5 billion recorded for the corresponding period in 2020, a decline of 15.4%. During the first quarter of 2021, the bank registered Rs. 11.5 billion in interest expenses, which was a 20.7% decline against the corresponding period in 2020.
The bank’s NFBI comprises credit, trade, as well as card and electronic channel-related fees and commissions. Driven by higher business volumes in these areas, NFBI for the quarter under review grew to Rs. 2.6 billion, a 15.8% increase compared to Rs. 2.2 billion recorded in Q1 2020.
Net other operating income grew by 16.9% during the period under review, led by an increase in realised exchange income, which is attributed to a 7.3% depreciation of the Sri Lankan rupee against the US dollar. Benefitting from the rupee depreciation, net other operating income for the first three months of 2021 increased to Rs. 2.7 billion, compared to Rs. 2.3 billion reported during the corresponding period in 2020. On the other hand, due to the aforementioned currency depreciation, the bank incurred a net trading loss of Rs. 335 million due to mark-to-market losses on forward exchange contracts. Accordingly, the bank’s net exchange income from foreign exchange transactions amounted to Rs. 2.3 billion for the period under review.
The bank’s total operating expenses, which amounted to Rs. 5.1 billion in Q1 2020, increased by 6.9% to Rs. 5.5 billion in Q1 2021. Higher personnel expenses mainly contributed towards this increase. However, thanks to stringent cost containment strategies, other expenses decreased by 6.4% in Q1 2021 compared to the corresponding period in 2020.
Meanwhile, owing to the overall increase in operating expenses, Sampath Bank’s cost-to-income ratio (excluding taxes on financial services) increased to 38.9% at the end of 31 March 2021, considerably higher than the 37.1% reported for the corresponding period in 2020.
Impairment charges for the period under review dropped by 75.7% compared to Q1 2020 and stood at Rs. 1.2 billion at the end of the quarter ended 31 March 2021. This is primarily due to higher impairment provisions made in the first quarter of last year. The first quarter of 2020 saw the spread of Covid-19 in Sri Lanka, prompting the Government to declare a nationwide lockdown from March 2020 for a period of almost two months. This unique situation created uncertainties which the country has never seen before. After a careful assessment of the situation and considering the possible impact on the Sri Lankan economy and its direct impact on the bank’s credit quality, Sampath Bank prudently decided to increase substantially its impairment provision for Q1 2020.
However, commencing from the latter part of the year 2020, the bank saw an improvement in credit quality among customers who did not obtain the moratorium, which is reflected in the decrease of stage 3 loans by 4.4%. This factor also contributed to the decrease in the impairment provision compared to Q1 2020.
In 2020, the bank downgraded customers operating in elevated risk industries on a prudential basis from Stage 1 to Stage 2, and recognised a substantial provision to account for the potential risk. Further provisions were made by increasing the probability weightage on the worst-case macro-economic scenario to capture the expected credit losses. Moreover, given the sluggish movement in the overall advances portfolio and the debt moratorium extended in 2020 and also considering the potential impact that could arise once the debt moratorium phase II lapses, it was decided to recognise a material impairment provision as an allowance for overlay, in 2020. It should be noted that the bank has used the same impairment models and assumptions used in the previous year to determine impairment provisions for Q1 2021 and continues to carry forward the additional impairment provisions made last year.
Sampath Bank PLC Chairman Harsha Amarasekera and Sampath Bank PLC Managing Director Nanda Fernando[/caption]
Sampath Bank recorded a Profit Before Tax (PBT) of Rs. 6.1 billion in Q1 2021 compared to Rs. 3 billion in Q1 2020, denoting a growth of 101%, while Profit After Tax (PAT) increased by 83% to Rs. 4.6 billion from Rs. 2.5 billion recorded in the first quarter of 2020. Resilient performance of all business lines along with the improved credit quality helped bolster Sampath Bank’s performance in the first quarter of 2021.
The Sampath Group also registered significant growth in Q1 2021, as evinced by the improvement in both PAT and PBT in the first quarter of the year. The group reported a Rs. 5.1 billion PAT and a Rs. 6.7 billion PBT for the period under review, denoting a growth of 90.7% and 103.5%, respectively, compared to the figures reported for the same period in the previous year.
Net Interest Income (NII) declined by 7.7% during the period under review to Rs. 9.2 billion from Rs. 9.9 billion recorded in the corresponding period in 2020. The drop in the NII is attributed to the prevailing low interest rate environment. However, the bank continues to proactively monitor all variables that are likely to impact the NII to ensure a sustainable return.
Overall, interest income for the period under review decreased by Rs. 3.8 billion to Rs. 20.7 billion compared to Rs. 24.5 billion recorded for the corresponding period in 2020, a decline of 15.4%. During the first quarter of 2021, the bank registered Rs. 11.5 billion in interest expenses, which was a 20.7% decline against the corresponding period in 2020.
The bank’s NFBI comprises credit, trade, as well as card and electronic channel-related fees and commissions. Driven by higher business volumes in these areas, NFBI for the quarter under review grew to Rs. 2.6 billion, a 15.8% increase compared to Rs. 2.2 billion recorded in Q1 2020.
Net other operating income grew by 16.9% during the period under review, led by an increase in realised exchange income, which is attributed to a 7.3% depreciation of the Sri Lankan rupee against the US dollar. Benefitting from the rupee depreciation, net other operating income for the first three months of 2021 increased to Rs. 2.7 billion, compared to Rs. 2.3 billion reported during the corresponding period in 2020. On the other hand, due to the aforementioned currency depreciation, the bank incurred a net trading loss of Rs. 335 million due to mark-to-market losses on forward exchange contracts. Accordingly, the bank’s net exchange income from foreign exchange transactions amounted to Rs. 2.3 billion for the period under review.
The bank’s total operating expenses, which amounted to Rs. 5.1 billion in Q1 2020, increased by 6.9% to Rs. 5.5 billion in Q1 2021. Higher personnel expenses mainly contributed towards this increase. However, thanks to stringent cost containment strategies, other expenses decreased by 6.4% in Q1 2021 compared to the corresponding period in 2020.
Meanwhile, owing to the overall increase in operating expenses, Sampath Bank’s cost-to-income ratio (excluding taxes on financial services) increased to 38.9% at the end of 31 March 2021, considerably higher than the 37.1% reported for the corresponding period in 2020.
Impairment charges for the period under review dropped by 75.7% compared to Q1 2020 and stood at Rs. 1.2 billion at the end of the quarter ended 31 March 2021. This is primarily due to higher impairment provisions made in the first quarter of last year. The first quarter of 2020 saw the spread of Covid-19 in Sri Lanka, prompting the Government to declare a nationwide lockdown from March 2020 for a period of almost two months. This unique situation created uncertainties which the country has never seen before. After a careful assessment of the situation and considering the possible impact on the Sri Lankan economy and its direct impact on the bank’s credit quality, Sampath Bank prudently decided to increase substantially its impairment provision for Q1 2020.
However, commencing from the latter part of the year 2020, the bank saw an improvement in credit quality among customers who did not obtain the moratorium, which is reflected in the decrease of stage 3 loans by 4.4%. This factor also contributed to the decrease in the impairment provision compared to Q1 2020.
In 2020, the bank downgraded customers operating in elevated risk industries on a prudential basis from Stage 1 to Stage 2, and recognised a substantial provision to account for the potential risk. Further provisions were made by increasing the probability weightage on the worst-case macro-economic scenario to capture the expected credit losses. Moreover, given the sluggish movement in the overall advances portfolio and the debt moratorium extended in 2020 and also considering the potential impact that could arise once the debt moratorium phase II lapses, it was decided to recognise a material impairment provision as an allowance for overlay, in 2020. It should be noted that the bank has used the same impairment models and assumptions used in the previous year to determine impairment provisions for Q1 2021 and continues to carry forward the additional impairment provisions made last year.