HNB Group PAT Rs 19.1 bn in 2018

The HNB Group recorded a Profit Before Tax of Rs.26.5 billion and a Profit After Tax of Rs. 19.1 billion, posting a YoY growth of 14.6 per cent and 14.4 per cent respectively for the year ended 2018 “in a clear demonstration of the resilience of the group’s robust business model despite an array of challenges faced by the industry”.

Driven by sound loan book growth and improved margins, interest income at the bank grew by 12.4 per cent YoY to Rs.108.1 billion, the bank said in a media release.

HNB Chairman Dinesh Weerakkody stated that: “I’m pleased to note the overall performance of the group reinforcing our group position in the market and I extend my gratitude to all our stakeholders for the trust placed in us and support to navigate through very challenging economic and regulatory headwinds.” He added that “as we have always been, we stay committed to helping people and businesses prosper in enhancing the quality of life in Sri Lanka”

The industry witnessed the non performing advances ratio deteriorating by about 100 bps during the year and the bank successfully managed its NPA ratio at 2.78 per cent as at end of the year. The individual impairment for the year decreased by 10.4 per cent to Rs.3.9 billion.

The group reported an ‘ Operating Profit’ prior to taxes and levies of Rs. 33 billion, a considerable 16.4 per cent YoY growth over the Rs.28.4 billion achieved in the previous year. The bank’s Operating Profit amounted to Rs.29.3 billion which is a growth of 8.3 per cent YoY.

The bank’s PBT grew by 4.1 per cent YoY to Rs.23 billion.

Commenting on the 2018 performance, MD/CEO of HNB Jonathan Alles stated that “the year 2018 posed challenges to the banking sector on many fronts. The stressed market conditions and significant debt collection challenges resulted in a decline in asset quality industry wide, whilst the requirement to adopt SLFRS 9 reporting standards further exacerbated this position, requiring higher impairment charges. The recent downgrade of the sovereign rating has increased the borrowing cost and triggered further impairment of investments in foreign currency government securities held by the sector”.

He said: “Disproportionately excessive taxes imposed through the new Inland Revenue Act including the ad hoc debt repayment levy, has had a significant impact on the profitability resulting in a significant capital erosion in the industry at a time when the more stringent Basel III regulations requiring more capital, is being rolled out. The total capital adequacy requirement increased from 10 per cent at 30th June 2017 to 14 per cent with effect from 1st January 2019. We see these challenges continuing to affect the growth of the banking sector.”