Amana Bank September quarter moderates on higher financing expenses
Amana Bank PLC reported modest financial performance for the quarter ended September 30, 2018 (3Q18), as the Islamic lender appears to be feeling the brunt of the rising interest rates as the bank’s financing expense rose faster than its corresponding income.
According to the interim results filed with the Colombo Stock Exchange, Sri Lanka’s first Islamic bank reported a modest 7.3 percent growth in the net financing income to Rs.818.2 million.
Net financing income is the difference between the financing income earned from loans and other assets and the financing expenses on deposits and other liabilities of the bank.
The bank’s financing expenses rose at a rate of 28.4 percent year-onyear (YOY) during the three months under review while the financing income rose by 17.5 percent YOY reflecting mounting pressure on the bank’s financing margin.
The bank gave new loans worth of Rs.2.7 billion during the three months, logging Rs.6.9 billion or
15.9 percent growth in loans for the nine months ended September 30, 2018.
Amana Bank identifies loans as ‘financing and receivables’ in Islamic banking terms.
The bank has a total financing and receivables portfolio of Rs.50.3 billion and assets of Rs.73.2 billion.
Meanwhile, the deposits or ‘funds due to other customers’ grew by Rs.4.5 billion during the three months bringing the total growth to Rs.7.3 billion for the nine months.the bank has a deposit portfolio of Rs.58.2 billion.
The financing margin was 4.4 percent, up 2 basis points from the beginning of the year.
The bank reported a net operating income of Rs.900.4 million, up 7.9 percent YOY.
Meanwhile, the bank reported earnings of 6 cents a share or Rs.141.7 million for the September quarter, up 23.1 percent YOY.
For the nine months ended in September, Amana Bank reported earnings of 18 cents or Rs.429.9 million, up 61 percent YOY.
The net financing income was up 22.7 percent YOY to Rs.2.4 billion.
The provisions made against possible bad loans were also sharply up in the general provisions category.
The gross non-performing loans ratio was also sharply up from 1.89 percent in January to 2.78 percent in September.
As at September 30, 2018, IB Growth Fund (Labuan) LLP, a part of Jeddah-based Islamic Development Bank Group, had 23.65 percent stake in the bank, down from 29.97 percent stake held in June 20, 2018.
In 2017, Amana Bank issued 1.25 billion new shares at Rs.3.80 to its existing shareholder, Islamic Corporation for the Development of the Private Sector (ICD), the fund manager of IB Growth Fund (Labuan) LLP – (IBGF) to raise Rs.4.75 billion to stay in line with the minimum capital levels imposed by the Central Bank.