Sampath Bank profit up 10.5% to Rs 18.3 bn in 2018

Sampath Bank this week reported a Profit before Tax (PBT) of Rs. 18.3 billion for the year ending December 2018, up by 10.5 per cent against Rs. 16.6 billion earned in 2017.

This is after making necessary adjustments as per the SLFRS 9 new accounting standard which required impairment provisioning to be shifted from the incurred credit loss method used previously to the more forward-looking “expected credit loss” method (ECL), which has attracted higher impairment provisions, the bank said in a public announcement on Friday, adding that this was a significant achievement particularly given the challenging macroeconomic conditions that were seen right throughout the year.

However Profit after Tax (PAT) registered a marginal growth of 0.3 per cent from Rs. 12.10 billion in 2017 to Rs 12.14 billion in 2018.

The Sampath Bank Group also posted strong results with group PBT and PAT at Rs.19.1 billion and Rs.12.6 billion respectively, compared to Rs. 17.5 billion and Rs. 12.7 billion reported for the previous year.

The release said that Net Interest Income (NII), which accounts for more than 70 per cent of Sampath Bank’s total operating income reached Rs.38.1 billion compared to Rs.28.4 billion in 2017.

“This growth of Rs. 9.7 billion was supported by growth in loans and advances coupled with timely re-pricing of the asset and the liability portfolios to overcome the pressure on net interest margins,” it said.

The bank said 2018 was a challenging year for the banking sector as many key sectors of the economy came under pressure. With most businesses seeing poor results right from the start of 2018, all banks including Sampath Bank began to experience non-performing advances growing in the second and third quarters.

Accordingly the bank’s NPA ratio which stood at 1.64 per cent at end December 2017 went up to 4.25 per cent by the end of the third quarter in 2018, prompting immediate action to arrest the situation. “And thanks to these proactive measures taken in a timely manner, the bank’s NPA ratio improved to 3.69 per cent by the end of the financial year 2018.”

Sampath Bank’s total asset base which stood at Rs. 795.1 billion at end December 2017 ended up at Rs. 914.2 billion as at the year- end.

The bank’s loan growth slowed down during the year predominantly due to low credit demand. Also, with portfolio quality affected as a result of weak economic conditions, the bank began consolidating its activities and gross loans, which stood at Rs. 571.5 billion by end December 2017, grew by only Rs. 99 billion (17.3 per cent) to reach Rs. 670.3 billion by end 2018.