Amana Bank 1Q19 profits down despite solid loan growth
Amana Bank PLC, Sri Lanka’s only Shariah complaint fully fledged Islamic bank reported some strong growth in loans for the three months ended March 2019 (1Q19) but higher expenses on staff and newly introduced Debt Repayment Levy dented the lender’s bottomline.
Amana bank gave Rs.4.8 billion in new loans during the three months under review recording a 9.0 percent increase from end December 2018.
This is the highest growth recorded in percentage terms by any private lender during the first quarter of this year.
However, the bank reported
earnings of 5 cents a share or Rs.126.6 million during the quarter under review compared to 7 cents a share or Rs.162.8 million reported for the same period a year ago. Established in 2009, the bank operates with 929 employees and 29 branches with assets of Rs.78.2 billion, up 1 percent from end December 2018.
The largest stake or 29.97 percent of Amana Bank is owned by Islamic Development Bank whose funding membership spans across 57 Organisation of the Islamic Corporation member countries including Saudi Arabia, which has the largest capital contribution of 23.50 percent.
The net financing income, an equivalent used in Islamic finance for net interest income, rose by 8.0 percent year-on-year (YOY) to Rs.858.2 million for the period.
Meanwhile, the bank raised deposits of Rs.1.4 billion during the three months to Rs.63.1 billion.
The expenses for the period rose by 19 percent YOY to Rs.636.7 million of which the staff expenses rose by 15 percent YOY to Rs.342.7 million.
Meanwhile the Value Added Tax, Nation Building Tax and Debt Repayment Levy rose by 39 percent on year to Rs.134.6 million, mainly due to the impact from the latter.
The bank’s gross nonperforming loans ratio rose to 2.95 percent from 2.82 percent in December 2018 while the financing margin or the net interest margin slipped to 4.1 percent from 4.4 percent three months ago which weighed on the top line.