Amana Bank March profit surges on rising margins, new loans
The profits at Amana Bank PLC rose substantially during the quarter ended in March 2018 as Sri Lanka’s first non-interest based Islamic bank stretched its financing margin while its core banking had a fairly good period amid rising interest rates and new loan growth.
For the January – March period (1Q18) Amana Bank reported earnings of 7 cents a share or Rs.162.8 million compared to 5 cents a share or Rs.66.6 million in total earnings for the same period in 2017.
The bank’s functions driven on non-interest-based principle recorded a net financing income of Rs.791. 3 million, up 41 percent over the same period, last year.
The bank saw its net financing margin continued its upward trajectory during the quarter from 4.2 percent in December 2017 to 4.6 percent in March 2018.
The bank’s gross financing and receivables, which in typical banking terms referred to as the loan book, grew by Rs.2.1 billion to Rs.45.5 billion during the three months.
However, the bank’s asset quality suffered a setback on the back of loan growth as the gross non-performing finances and advances ratio rose to 2.20 percent from 1.89 percent in December 2017.
The bank has a total asset portfolio of Rs.67 billion and operates with very comfortable levels of capital adequacy.
As of March 31, 2018 the bank’s BASEL III compliant tier I and tier II capital ratios stood at 19.1 percent and 20.5 percent, respectively, against the regulatory minimums of 7.25 percent and 11.25 percent for each.
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.
This put the bank with an equity capital base of Rs.10.5 billion by the end of March 2018, surpassing the minimum capital of Rs.10 billion required to be met by January 1, 2018.
However, the bank now braces for Rs.20 billion in core-capital by the end of 2021, which requires the bank to double its existing capital within a matter of 4 years.
Meanwhile, the bank grew its deposit based by Rs.2.3 billion to Rs. 53.2 billion.
“I am confident that this performance will give added impetus for the rest of the year, ensuring our alignment to the targets set out in our 5-year strategic plan”, Amana Bank’s Chief Executive Officer Mohamed Azmeer said in a press release issued over interim results.