October, 30, 2024
- Return on Assets (pre-tax) - 1.77% (2023 - 1.06%)
- Return on Equity - 12.67% (2023 - 8.62%)
Pan Asia Banking Corporation PLC reported a resilient financial performance for the 9-month period ended 30th September 2024 amidst diverse challenges emerging from the improved but challenging macro- economic environment. The Bank’s financial performance in the current period demonstrated excellence in core banking performance, judicious portfolio management and prudency in navigating a possible fallout on its asset quality. Supported by improved net interest income, fee & commission income and other operating income and reduced credit costs, the Bank reported a Pre-tax Profit of Rs. 3.22 Bn for the 9 months period ended 30th September 2024, which is 52% increase compared to the corresponding period last year.
The Sri Lankan economy has experienced some positive signs of gradual economic recovery and a measure of stability in macro-economic factors compared to the corresponding period last year, with the appreciation of LKR against USD and the IMF bailout followed by the domestic and foreign debt optimization announcements made by the Government of Sri Lanka.
The models used regarding collective impairment in 2023 were continued in 9 months period ended 30th September 2024 to ensure that adequate provision buffers were in place to absorb any potential credit risk that could arise in the future. The allowance for overlays applied in 2023 were continued and maintained during 9 months period ended 30th September 2024 as well. Meanwhile the Bank managed to end the 9 months period 2024 with healthy credit quality matrices due to improved credit underwriting standards and concerted collection and recovery efforts. The Bank has further strengthened the impairment provision buffers held on Stage 3 exposures prudentially during the period under review.
Since the latter part of 2023, the market interest rates for both lending and deposits have gradually come down in line with the policy decisions taken by the Monetary Board of CBSL to reduce the policy rates couple of times. Thus, the Bank’s interest income of the 9 months period 2024 has decreased by 19% compared to the corresponding period last year, due to its response to the market conditions. Also, the interest expense of the 9 months period 2024 has decreased by 32% against the interest expense of the 9 months period 2023 due to low interest rates prevailed despite the growth in deposit book. Consequently, the net interest income has increased by 18% in the 9 months period 2024 due to the drop in interest expense at a faster rate than the drop in interest income.
The Bank’s net fee and commission income has increased by 26% during the 9 months period 2024 mainly due to the increase in fee income generated from loans and advances due to increased demand for credit which resulted from the prevailing low-interest rate regime and other conducive macro-economic factors in the country.
The net gains from trading decreased by 61% during the reporting period due to drop in capital gains from Sri Lanka Government Rupee Securities (T-Bills/Bonds) classified under FVPL. The other operating income has increased significantly by 189% due to the prudently managed FX Positions with the appreciation of LKR against USD during the 9 months period 2024.
The Bank strived for earnings maximization through portfolio re-alignment and effective cost management amidst improved macro-economic conditions as the Bank reported an improved Cost-to-Income ratio of 47.63% during the reporting period from 48.31% for the year 2023.
The increase in personnel expenses was mainly driven by increased staff salaries, bonuses and allowances to recognise and retain staff. The increase in other operating expenses contained to 11% due to the effective cost management strategies of the Bank and the cost increase is primarily due to effect of increased VAT rates from 01st January 2024 onwards and general price increase of goods and services such as electricity and travelling expenses.
The taxes and levies on financial services and income tax expense have gone up mainly due to the increase in operating profits. The increase in income tax expense for the 9 months period 2024 was negated to some extent by reversal of previous period income tax provisions based on the successful outcomes of tax appeal processes.
The Bank reported a Profit after Tax (PAT) of Rs. 2.22 Bn in the 9 months period 2024 which is a 78% increase compared to the corresponding period last year. The Bank reported an Earnings Per Share (EPS) of Rs. 5.01 for the 9 months period ended 30th September 2024.
The Bank reported a Net Interest Margin (NIM) of 4.84% for the 9 months period 2024. Meanwhile, the Bank reported a Return on Equity (ROE) of 12.67% and a Pre-Tax Return on Assets (ROA) of 1.77% for the period under review. Meanwhile, the Bank’s Net Asset Value Per Share as of 30th September 2024 stood at Rs. 55.81.
The Bank’s total assets experienced an increase of 8% mainly driven by loans and advances and financial assets at FVOCI. The loans and advances book has increased by 12% during the period under review mainly due to the increased credit demand specially in the business banking segment. In the meantime, the Bank’s total customer deposits base recorded a healthy growth of 8% to reach Rs. 190 Bn as of 30th September 2024. As a result, the CASA Ratio of the Bank has improved by 431 bps to 22% level.
The Bank’s Stage 3 Loan Ratio improved to 3.80% as of 30th September 2024 from 4.36% as of the last year-end while Stage 3 Provision Cover increased to 52.65% as of 30th September 2024 from 47.13% as of last year-end. These healthy credit quality matrices reflect the Bank’s improved credit underwriting standards, concerted collection & recovery efforts and prudent provisioning policies of the Bank. The Bank
continued its focused actions towards managing the quality of its loan book by containing NPLs amidst the challenging economic landscape.
The Bank maintains all its capital and liquidity ratios well above the regulatory minimum standards. The Bank’s Tier 1 Capital Ratio and Total Capital Ratio as of 30th September 2024 stood at 15.20% and 17.08% respectively. Further, the Bank’s Leverage Ratio stood at 7.05% as of 30th September 2024.
The Bank’s Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) under BASEL III Accord stood well above the statutory minimums. The Bank maintained LCR of 312.89% and 221.71% in All Currencies and Rupees respectively and NSFR of 143.17% as of 30th September 2024.
Commenting on the Bank’s performance, Naleen Edirisinghe, Director and CEO of Pan Asia Bank said, “Pan Asia Bank continues to demonstrate resilience despite external challenges by delivering on the fundamentals. Our solid financial and operational results for the 9-month period of the year 2024 demonstrate that we are well positioned to achieve the financial goals of the Bank. A growth in PAT of 78% for the 9 months period 2024 affirms our sound strategy, which will be accelerated for generating greater earnings from core banking while infusing operational efficiencies. The spirit of innovation continues to drive Pan Asia Bank as we make notable strides in the digitalization of our products and services, backed by an industry best team, thereby paving the way to achieve new milestones in the coming year”.
Recording consistent growth year after year, Pan Asia Bank is strongly positioned as the ‘Truly Sri Lankan Bank’, marking an illustrious journey that has promoted financial security and fulfilled the aspirations of its customers while supporting the prosperity of the nation.
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