People’s Bank reports Rs.4.6bn consolidated PAT for 1Q23
■ „Consolidated gross income expands by 49.4% to Rs.116.8bn „■ Reports comprehensive income of Rs.3.7bn on bank solo basis and Rs.4.6 billion on consolidated basis
■ Continues to benefit from industry’s lowest exposure to foreign currency denominated investments subject to external debt restructure
■ Maintains highest solvency buffers amongst peers under existing Basel rules
■ Customer digital on-boarding continues strong momentum
People’s Bank reported total consolidated operating income and pre-tax profit amounting to Rs.24.0 billion and Rs.7.2 billion, respectively for the quarter ended March 31, 2023 (1Q23) compared to Rs.42.6 billion and Rs.11 billion in the corresponding quarter of the previous year.
Similar to 2022, the quarter continued to be characterised by higher interest costs due to the high interest rate environment which prevailed. This saw consolidated net interest income dip by 49.7 percent to Rs.15.3 billion during the period relative to 1Q22.
This, in part, also reflected the bank’s efforts to defer re-pricing of some of its loans to its more sensitive customer segments. Consolidated net fees & commission income amounted to Rs. 4.5 billion, which excluding one off items during 1Q22 represented over 40 percent growth on a like for like basis.
Reflecting inflation pushed cost pressures, much of which originated in the period after 1Q22, saw consolidated total operating expenses rise by 10.1 percent to reach Rs.14.4 billion compared to Rs.13.1 billion a year ago. This compared well with the industry and, in part, also reflected Group efforts for greatercost control at every instance so reasonably possible.
Total consolidated customers deposits grew to reach Rs.2, 513.1 billion, up by 2.6 percent, while consolidated net loans contracted by 4.2 percent to Rs.1,835.1 billion.
The dip in net loans reflected a conscious effort on part of the bank and the group to control lending more so in a yet contracting macro-economic context. Total consolidated assets stood atrs.3, 072.2 billion at period end compared to Rs.3,133.1 billion a year ago. The bank’s Tier I and Total capital adequacy ratios were 11.8 percent and 16.2, respectively at March 31, 2023 compared to11.9 percent and 16.3 percent three months ago, while on a consolidated basis, it was 13.0 percent and 16.9 percent, respectively. The bank’s solvency levels remain sound ultimately reflecting efforts made since the onset of Basel III on July 1, 2017. Further efforts to bolster its regulatory capital, including for the purposes of additional contingency, is currently ongoing. In addition, the bank successfully met all key regulatory measures during the said period.
Commenting on the results of the Bank and the Group, the Chairman of People’s Bank, Sujeewa Rajapakse stated, “Whilst the sector has, and continues to reel with many headwinds over the last several years. Our first quarter results remain testimony to our continued strength and resilience, and adaptability even in the most adverse set of circumstances.
Over the last several years, the bank has successfully met the needs of its diverse stakeholders, leading from the front in many instances so to ensure the country is first prioritised, customer interest are safeguarded, government endeavors are supported whilst at the same time, the bank’s commercial interests are also met.”
“Our top line growth during the quarter attests to the growth of our core banking operations whilst the high interest rate environment which prevailed has naturally led to the inevitable earnings pressure as seen throughout the industry.
The quarter was however witness to several accomplishments from an institutional standpoint both from a quantitative and qualitative front. This included, amongst other, our ability to successfully drive identified strategic growth areas, ensure sustained improvements in liquidity both from a rupee and foreign currency standpoint and instill further improvements froma risk management perspective. In addition, our digital investments continue to bear fruit, which augurs well for the bank’s future growth prospects,” he added.
People’s Bank Chief Executive Officer/ General Manager (Acting) Clive Fonseka said, “Despite the many pressures, including those unique to a Stateowned Institution, we have continued to make noteworthy progress on several fronts and have addressed some of the most pressing matters within ashort span of time.
Our primary focus has, and continues to be, in further bolstering our liquidity, driving key areas of strategic importance and managing our asset quality whilst supporting our customers navigate through these challenging times. We are currently also taking early steps to bolster our regulatory capital from current levels. The success of our delivery remains ultimately best reflected in the sustained improvements shown across several key performance indicators.”
“Relating to the recent news being circulated in select social media platforms on non-performing loan write-offs, I seek to confirm that there have been no such write offs. Our usual due process for recovering such loans are currently in process,” he added.