HNB September net up 21% to Rs.1.68bn
HNB PLC continued its growth momentum despite the challenging environment demonstrating resilience, posting net profit of Rs.1.68 billion in the September quarter (3Q12), up from 21 percent year-on-Year.
The bank also posted a robust growth of 24% in pre-tax profit to Rs. 6.71Bn during the first 9 months of 2012 while post tax profit also increased by 28% to Rs. 4.61Bn over the corresponding period in 2011.
Commenting on the performance, the Chairperson of HNB Dr. Ranee Jayamaha stated that “HNB’s success in recording sustainable growth, withstanding adverse market conditions, is attributable to the solid business model, focus, prudence and commitment as well as the trust our valuable customers have placed in us over the years”.
The Bank posted Gross income of Rs 37.9 billion for the 9 months to 30th September 2012 which was an increase of 40% over the previous 12 months. The interest income from loans and advances too recorded a growth of 41% during the first 9 months of 2012, compared to 2011 on account of the growth in loans and advances and rising interest rates.
In line with the direction issued by the Central Bank to limit the growth in credit, the Bank cautiously expanded its loan book through quality credit, with gross loans and advances increasing by 14%, recording a growth of Rs. 37.2Bn to reach Rs. 300.9Bn as at end of September 2012.
Interest expenses also increased by 56% to Rs. 18.7Bn due to the growth in deposits and re-pricing of liabilities at higher interest rates amidst heavy peer competition. The deposit base of the Bank grew by Rs. 35.7Bn during the period under review posting a 12% growth to reach Rs. 323.7Bn as at end of September 2012 while the deposit mix witnessed a shift towards high yielding time deposits due to the prevailing market conditions. Nevertheless, as a result of prudent asset and liability management, the Bank recorded a 26% growth in net interest income during the period.
The non interest income of the Bank also increased to Rs. 4.1Bn recording a growth of 30% during the first nine months of 2012, driven by both forex income and other income. Increase of 22% in other income was mainly on account of higher commission income while exchange income too recorded a 55% growth during the first 9 months of 2012.
During the period under review, the Bank was successful in reducing its cost to income ratio to 52.4%, which is a remarkable improvement in comparison to 57.7% as at end of December 2011(59.7% in September 2011) despite the expansion in the delivery network by 21 new customer centres during the 12 months up to 30th September 2012.
Rajendra Theagarajah Managing Director / CEO of HNB commented that, “In 2012 one of our key objectives has been cost optimization and the measures taken by the Bank in this regard, have yielded expected results. We will continue to focus on maximizing efficiency through process improvements and deployment of new technology”.
The asset quality improved over the previous quarter of 2012, with Gross NPA ratio reducing to 4.05% from 4.58% and Net NPA ratio from 2.85%to 2.25%, due to prudent credit and risk management policies. HNBs Provision cover too, witnessed an improvement over previous quarter to 44.35%, from 37.78%.
The Bank’s core capital and total capital adequacy ratio improved further to 12.72% and 15.54% respectively as at 30th September 2012, as against the statutory minimum of 5% and 10%.
HNB Group recorded a pre-tax profit of Rs. 7.15Bn for the 9 months ended 30th September 2012, up by 24% from Rs. 5.78Bn in 2011 and a post-tax profit attributable to the Group of Rs. 4.92Bn up by 26% from Rs. 3.89Bn made during the corresponding period last year. The performance of the insurance subsidiary HNB Assurance PLC as well as the property development subsidiary Sithma Development (Pvt) Ltd made noteworthy contributions towards the growth.