Sampath Group posts Rs.4,250 mn PBT
Sampath Bank Group which consists of Sampath Bank and four subsidiary companies, continued with the growth momentum in the 1st half 2012, by posting impressive results in many key areas over the last year’s same period, amidst increasing interest rates and shifting of funds towards high cost deposits due to the prevailing market conditions.
Pre-tax Profit of Rs.4, 250.1 Mn of the Group for the 1st H 2012 was a growth of Rs. 1,273.2 Mn or 42.8 %, over the previous year’s 1st H pre-tax profit of Rs. 2,976.9Mn, with Sampath Bank, as the main entity of the Group contributing bulk (97.7%) of the profit. The post - tax profit of the Group amounted to Rs. 2,855.1Mn, recording a growth of Rs. 724.2 Mn or 34.0%, over the post-tax profit of Rs. 2,131.0 Mn for the last year’s same period.
The Bank’s pre-tax profit which rose to Rs. 4,150.6 Mn in the 1st H 2012, reflected an increase of Rs. 1,345.3 Mn or 48.0% over the pre-tax profit of Rs. 2,805.3 Mn for the 1st H 2011. The post –tax profit of the Bank recorded a growth of 40.4 % over the same period of last year, rising from Rs. 1,987.7 Mn in 2011 to Rs.2,789.8 Mn in 2012. The lower PAT growth rate of 34.0% at the group level was mainly due to the drop in profits of the Stock Brokering subsidiary, SC Securities Company, arising from the current situation in the Colombo Stock market.
The above income, one of the the key contributory factors for the high profit growth in the 1st H2012, rose from Rs.238.3Mn in the 1st H 2011 to Rs.2,336.4 Mn in the 1st H 2012, recording a growth of Rs.2,098.1 Mn or 880.6%. This was facilitated mainly by the increase in the revaluation gains on the foreign currency reserves held in the Bank’s FCBU, as a result of sharp depreciation of Rupee against the US Dollar in 2012 ( from Rs. 113.9 as at 31st Dec 2011 to Rs. 133.90 as at 30th June 2012) and the substantial increase in the Dealing Room’s trading Profits.
Operating expenses of the Bank which stood at Rs. 3,747 Mn in the 1st H 2011, rose to Rs. 4,458 Mn in the 1st H 2012, recording an increase of Rs. 711 Mn or 19%. This growth in operating expenses was largely due to the incremental cost incurred in connection with the opening of 18 new branches in 2nd half 2011and the increase of the staff cadre, which too was due to the expansion drive. The Bank anticipates that the cost increase rate would be somewhat lower in years to come, in view of the moderation expected in the branch expansion program, given the fact that Bank’s branch network has now adequately covered most of the potential locations of the country. Apart from this, effect of the salary increments during the year and inflation in the economy also impacted on the increase in operating expenses over the previous year’s same period.
The growth rates in deposits and total assets during the 1st H 2012 amounted to 12.1% and 14.5 % respectively and compared well with the industry’s growth rates of 9.3% and 13.7%, during the period.
In addition, the growth rate in customer advances during the 1st H 2012 amounted to 14.1%, as against the industry average of 13.0% during the period.
In the 2012 rating assessment, considering the healthy asset quality, better compliance, transparency, capital adequacy, internal control systems & processes of the Bank, RAM Ratings Lanka has reaffirmed AA (stable) rating for Sampath Bank, in their rating assessment. In the last year, the overall credit rating of the Bank’s “AA-“lka (positive) has been affirmed by Fitch Rating Lanka too. Sampath group was recognized as the “Best Banking Group in Sri Lanka for the year 2012” at the World Finance Awards presented by World Finance Magazine.