Sampath Bank operating profit down by 10.8-pct, PAT up due to concessions

May 13, 2020 (LBO) – Operating profit of Sri Lanka’s Sampath Bank for the first quarter, which is the real return generated by utilizing the assets and liabilities, declined by 10.8%, interim accounts showed.

The challenges brought by COVID – 19 and the recession brought on by the terrorist attack in April 2019 has lead the period under review to be pressurized by some unique challenges that were not seen in Q1 2019, the bank said in its interim report.

Sampath Bank recorded a profit before tax (PBT) of Rs 3 Bn for the quarter ending 31st March 2020. The Bank reported Profit after tax (PAT) of Rs 2.5 Bn for the three months ended 31st March 2020, reflecting a growth of 15.7% over the corresponding period in 2019.

PAT growth was attributed to two factors; (1) the higher exchange income due to depreciation of the Sri Lankan rupee against the US dollar by Rs 7.90 during the quarter and (2) tax concessions received owing to the abolition of Debt Repayment Levy and NBT on financial services.

Meanwhile, the Sampath Group achieved a PBT of Rs 3.3 Bn and a PAT of Rs 2.7 Bn for the period under review compared to Rs 2.8 Bn and Rs 2.1 Bn reported in the corresponding period of 2019.

Interest income for the period under review decreased by Rs 1.1 Bn and stood at Rs 24.5 Bn compared to Rs 25.6 Bn recorded in the corresponding period in 2019, a decline of 4.3%. Interest expenses for the period under review decreased by 5.5%.

The total impairment charge for the first three months ended 31st March 2020 was Rs 4.9 Bn compared to Rs 3.5 Bn recorded in 1Q 2019 denoting an increase of 39.7%.

The gross non-performing loans increased to 6.72% at the end of 31st March 2020 from 6.37% reported at the end of 2019.

Due to a lack of reasonable and reliable information with regard to the impact of COVID – 19 on its customers as at the reporting date, the Bank has taken into consideration the long-term economic trends as the basis of calculating impairment provisions for the quarter.

Sampath Bank’s total asset base grew by 2.2% during the period under review to reach Rs 983 Bn as at 31st March 2020. In comparison, the total asset position as at 31st December 2019 stood at Rs 962 Bn.

Gross loans & advances grew by 3.4% to reach Rs 744 Bn as at 31st March 2020, recording a growth of Rs 24.8 Bn for the period under review.

The total deposit base increased by Rs 31.1 Bn for the same period, to reach Rs 749 Bn as at the reporting date, a growth of 4.3%.

Future of the Bank

Sampath Bank said it will adopt a broad-based approach that includes sound strategic planning coupled with effective management decisions to overcome the prevailing challenges.

“All ongoing projects and recent proposals will be re-evaluated with a view to redirecting expenditure only to essential core business requirements,” the bank said.

“At the same time, the Bank will cautiously explore new business opportunities that may present itself from time to time. In this regard, the Bank will seek to upgrade the skills of employees and invest in technology where necessary in order to leverage on such opportunities successfully.”