Seylan Bank PLC reported group earnings of Rs.4.10 per share or Rs.1.45 billion for the December quarter (4Q17), compared to Rs.3.37 a share or Rs.1.2 billion in the same quarter of the previous year, the interim financial accounts released by the bank showed.
At bank level, the earnings rose 21 percent year-on-year to Rs.1.42 billion.
For the year ended December 31, 2017, the banking group reported earnings of Rs.13.68 per share or Rs.4.81 billion, compared to Rs.11.40 a share or Rs.4.01 billion recorded for the previous financial year.
With the non-controlling interest, the bank’s group net profit topped Rs.5 billion, which the bank said the highest ever profit reported in its history.
An earnings review from the bank said, “The net interest income recorded a moderate growth of 15.03 percent as a result of the strong balance sheet growth. The net interest margin stood at 4.24 percent.
The net fee and commission income witnessed a 22.07 percent robust growth from Rs.3,103 million to Rs.3,788 million during 2017. This was mainly attributed from the core banking-related business.
The other operating income, comprising of the net gains from trading, net gains on financial instruments, gains on foreign exchange and other income, increased by 39.18 percent from Rs.1,192 million reported in 2016 to Rs.1,660 million during 2017, mainly due to the capital gains on government securities.
The total expenses recorded an increase of 11.90 percent from Rs.9,725 million to Rs.10,882 million. An expenses growth was witnessed by a higher proportion of investments being made towards branch upgrading and refurbishments, continuous development in human resources and technology, which resulted in the underlying expenses increasing rapidly over the previous period. Nevertheless, the bank continues to focus on cost management through strategic cost management initiatives.
The bank reported a net credit growth of 19 percent, with the net advances growing from Rs.236,020 million to Rs.280,862 million during 2017.
The current and savings accounts (CASA) growth slowed down with a notable shift from low cost to fixed deposits seen mainly due to the increasing interest rates. As a result, the bank’s CASA ratio stood at 31.20 percent and the total time deposits increased from 67.48 percent by end-2016 to 68.80 percent as at December 31, 2017 of the total deposit base. The overall deposit base recorded a growth of 12.30 percent from Rs.273,456 million by end-2016 to Rs.307,099 million by December 31, 2017.
The bank recorded a return on average asset (ROAA) of 1.74 percent and return on equity (ROE) of 14.30 percent. The bank’s net asset value per share, as at December 31, 2017, was Rs.96.50 (group Rs.101.08).
The bank remains well capitalised with a strong common equity Tier I ratio of 11.16 percent, a total Tier I capital ratio of 11.16 percent and a total capital adequacy ratio of 13.25 percent under Basel III, as at December 31, 2017. In January 2018, Fitch reviewed the bank’s rating and reaffirmed the bank’s rating at ‘A-lka’ with a ‘stable’ outlook.
The bank has embarked on an ambitious growth strategy going towards 2020 for which the foundation was laid in the year 2017. Seylan 2020 key strategic priorities are to grow its CASA base, SME and retail lending portfolios by building a dynamic and efficient customer relationship force along with robust support functions by leveraging on information technology.”