Seylan Bank made a steady start in 2018 by posting a Profit after Tax of Rs. 1,053 Million in Q1 despite less than ideal market conditions.
Net interest income increased by 17.21% as the volume growth outperformed the impact arising from the narrowing of NIMs.
Net fee and commission income witnessed a growth of 14.61% to reach Rs. 995 Million in 1Q 2018 as compared to Rs. 868 Million for the comparative period. Initiatives put in place to harness fee generating business across various customer and market segments such as card related income, trade finance related fee income and fees from guarantees, remittances is progressing rapidly as reflected by the increases shown in fee based income.
Other operating income comprising of gains from trading, gains from financial investments, gains on foreign exchange and other income were reported as a net gain of Rs. 366 Million compared to net gain of Rs. 238 Million in 1Q 2017.
Impairment charges for loans and other losses for the period reached Rs. 542 Million as compared to a charge of Rs. 346 Million in Q1 2017. Individual impairment charges of Rs.380 Million represent provisions specific credit exposures.
Total Expenses recorded an increase of 10.46% from 2,705 million in the 1Q of the previous year to Rs. 2,988 Million during the period under review. Expenses growth was witnessed by investments made in employees, IT and infrastructure, upgrading and refurbishment of branches etc.
The bank continued to focus on widening the roll-out of lean initiatives, workflow methods and automation across the bank in its pursuit towards rationalising expenditure on key controllable cost lines and inculcating a culture of working smarter across all the functions by the employees.
Loans and advances portfolio of the Bank recorded a marginal growth of 3.01% to 289,302 Million during the 1Q 2018 amidst rising interest rates. The growth in credit was driven primarily by Term loans and Overdrafts.
The overall deposit base recorded a marginal growth of 1.24% to 310,904 Million by 1Q 2018 and a shift from low cost CASA to term deposits was noted which is partly due to increase in interest rates. As a result Bank’s CASA ratio (Current and Savings) stood 31.25% and total time deposits increased from 68.80% by end of year 2017 to 68.75% as at 31st March 2018 of the total deposits base.
As a result of the noteworthy financial performance during first quarter, Bank’s Earning per share (EPS) grew by 21.57% to Rs.2.88. The Bank recorded a Return on Average Assets (ROAA) of 1.52% and Return on Equity (ROE) of 12.25%. The Bank’s Net Asset Value per share as at 31st March 2018 was Rs.94.34 (Group Rs.98.63)
Seylan Bank remained soundly capitalised, with the key capital adequacy ratios well above the regulatory minimum requirements and recorded 10.37% as the total Tier 1 capital ratio and 14.29% as the total capital ratio.
The Bank recognises education as one of the building blocks of the nation and considers it as a priority area for its CSR activities. Under the ‘Seylan Pahasara’ project the Bank opened 8 libraries during the first quarter which add up to total of 161 libraries in rural areas, especially in under privileged schools with the aim to nurture young minds and educate them so that they contribute to the nation’s development.
The Bank is committed to expanding its branch network in order to provide its customers with the best possible service at all times. The Bank network currently comprises 168 Banking Centers and 206 ATMs. In keeping in line with the strategy of expanding customer touch points to enhance accessibility and convenience. Fitch reviewed the Bank’s rating and reaffirmed the Bank’s rating at ‘A-lka’ with a ‘stable ‘outlook.