May, 15, 2017
Starting the year 2017 in a positive note, Sampath Bank surpassed Rs 2.0 Bn mark to achieve post tax profit of Rs 2.3 Bn for the quarter ended 31st March 2017. This registered an impressive 34.6% growth in comparison to the profit after tax (PAT) of Rs 1.7 Bn recorded for 1Q 2016. Profit before tax (PBT) too grew by 36.4% YoY and reached Rs 3.5 Bn in 1Q 2017. Sampath Group, which comprises of Sampath Bank and four fully owned subsidiary companies has also posted a growth of 33.3% and 29.5% at PBT and PAT levels respectively.
The Bank achieved a substantial growth in all key business pillars in the first quarter of the year 2017.
Fund based income (FBI)
Net Interest Income (NII), which is the main source of income representing more than 70% of the total operating income of the Bank, recorded an increase of Rs 1.7 Bn (36.1%) during the period under review. Accordingly, the Bank recorded Rs 6.3 Bn as NII for 1Q 2017, as against Rs 4.7 Bn recorded in the corresponding period in 2016.
The above achievement was made possible by the robust growth recorded in the Bank’s fund base, as indicated by 4.4% (annualized 18%) growth in deposits and 6.5% (annualized 26%) growth in advances, coupled with timely re-pricing of asset and liability products and other fund management strategies adopted by the Bank.
Non fund based income (NFBI)
Net fee and commission income, which largely comprises of credit, trade, card and electronic channel related fees increased to Rs 1.9 Bn in the quarter under review, as opposed to Rs 1.5 Bn recorded in the corresponding period in 2016. This important income source too has posted a notable YoY growth of 32.5% leveraging on credit and trade related segments, expansion of the credit card operations and successful launching of innovative value additions through electronic channel offerings.
Bank's other operating income recorded a marginal increase of 7.1% during the period under review, in comparison to the corresponding period. The increase in dividend income from subsidiaries and the increase in realized exchange income have contributed to the said increase in this income source. Consequently, Other Operating Income for 1Q 2017 stood at Rs 776.2 Mn, as opposed to Rs 724.9 Mn reported for 1Q 2016.
Operating expenses
Operating expenses of the Bank which stood at Rs 3.4 Bn in 1Q 2016, increased to Rs 4.0 Bn during the period under review, reflecting an YoY increase of 15.9%. This increase was mainly due to increase in personnel expenses triggered by salary increments & other relevant expenses, as well as general price hikes & tax increases etc. However, the Cost to Income ratio excluding VAT & NBT on financial services has improved to 43.7% in the first quarter of the year from 50.8% reported in the same period in 2016. This records an improvement of 710 basis points, which is a significant achievement particularly in view, Sampath Bank having one of the youngest branch networks compared to its closest competitors.
Impairment charge on loans and receivables
Impairment charge amounting to Rs 646.1 Mn recorded for 1Q 2017 showed an increase of Rs 429.6 Mn over the comparative period’s charge of Rs 216.5 Mn. Impairment charge against individually significant customers increased by Rs 384.9 Mn due to provision increases made against already impaired customers after considering the latest market conditions. On the other hand, collective impairment charge increased by Rs 44.7 Mn predominantly due to the growth in the loan portfolio.
Business growth
Sampath Bank’s total asset base grew by 5.1% (annualized 20%) in 1Q 2017 to reach Rs 692.1 Bn as at 31st March 2017. The total asset position as at 31st December 2016 stood at Rs 658.5 Bn. Gross loans & receivables grew by 6.5% (annualized 26%) during the period and moved up to Rs 498.9 Bn (up by Rs 30.4 Bn) as at 31st March 2017. Total deposit base too increased by Rs 22.9 Bn, recording a growth of 4.4% (annualized 18%) during this period and stood at Rs 539.2 Bn as at the reporting date. The CASA ratio (38.4%) remained unchanged from 31st December 2016 to 31st March 2017.
Performance ratios
ROE (after tax) declined from 23.47% as at 31st December 2016 to 20.72% as at 31st March 2017. ROA (before tax) too has marginally contracted to 2.10% from 2.14% in the same period. However, compared to 31st March 2016 both ROE and ROA has shown increases as at 31st March 2017. The Basic Earnings per share for 1Q 2017 has substantially improved and stood at Rs 12.57 as against Rs 9.34 recorded during the corresponding period in the previous year. This was an impressive YoY growth of 34.6%. Statutory Liquid Asset Ratio (SLAR) as at 31st March 2017 was at 21.94% showing a marginal improvement against the ratio recorded as at 31st December 2016 (21.84%). The Bank was able to maintain SLAR well above the mandatory requirement of 20% throughout the period. Sampath Bank’s gross NPL ratio as at 31st March 2017 (1.73%), however, has marginally increased from 1.61% recorded as at 31st December 2016 due to marginal deterioration of credit quality.
Capital adequacy
The Core Capital (Tier I) and Total Capital (Tier I + Tier II) adequacy ratios which stood at 8.31% and 12.87% respectively as at 31st December 2016 have shown a drop during the period, as a result of increase in risk weighted assets triggered by growth in advance portfolio coupled with payment of cash dividend. Accordingly, Core Capital and Total Capital adequacy ratios as at 31st March 2017 stood at 7.68% and 11.93% respectively. Despite the slight drop, both ratios were maintained well above the minimum regulatory requirement of 5% for Core Capital and 10% for Total Capital.
Other information
2017 is an important year for Sampath Bank, where the Bank celebrates its 30th anniversary. Since its establishment in 1987, the Bank has progressively developed in all spheres of its operation and today it is positioned as the 3rd largest private sector commercial bank in Sri Lanka. The Bank is renowned for its innovative banking solutions and excellent customer service during the past three decades.
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