Sampath Bank March net profit up 21%

Net interest income down; negative credit growth

Sampath Bank PLC said its net profit for the quarter ended March 31 (1Q14) rose 21.4 percent year-on-year (YoY) to Rs.1.27 billion.

The net interest income for the period fell 8.7 percent YoY to Rs.3 billon amid a 3.7 percent negative loan growth.

The net fee and commis- sion income increased 21.6 percent YoY to Rs.758.2 million while the net trading income rose 31 percent YoY to Rs.351.4 million.

The individual impairment charges on bad loans rose 331 percent YoY to Rs.296.3 while the collective impairments recorded a gain of Rs.740 million against a charge of Rs.299 million.

“This was mainly due to the reversal of collective impairment made against the pawning advances in 2013 owing to the slight increase in gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier,” the bank said in a statement.

The total operating expenses for the quarter rose 20 percent YoY to Rs.2.8 billion due to increase in staff cost and upgrading the existing branches.

The basic earnings per share for the quarter improved to Rs.7.59 from Rs.6.26.

Amid a negative loan growth largely due to a drop in pawning advances, low credit demand and settlement of foreign currency barrowings, the deposit base of the banking group improved 3.8 percent to Rs.312 billion.

The cash and cash equivalents at the group level rose to Rs.16.4 billion at the end of March 31. The number remained at Rs.9.7 billion at the beginning of the year.

The cost to income ratio increased from 60.32 percent in the 1Q13 to 72.85 percent in 1Q14. This increase was mainly due to the drop in interest income owing to the interest loss on pawning articles auctioned.

The capital adequacy ratios stood at 9.89 percent (Tier I) and 13.85 percent (total) as at March 31, 2014, recording a marginal deterioration compared to the levels as at 31.12.2013, mainly due an increase in market risk arising from the decrease in market interest rates of the Treasury bill portfolio during the quarter.

Nevertheless, they remained well above the minimum regulatory requirements of 5 percent and 10 percent.