Seylan Bank PLC, with an asset base of Rs.489.5 billion, reported a subdued performance for the September quarter (3Q19) amid a sharp rise in the provisions made against the possible bad loans, the interim accounts released to the Colombo bourse showed.
The banking group recorded earnings of Rs.2.75 per share or Rs.1.04 billion for the quarter under review, virtually unchanged from a year ago.
The net interest income for the period grew 16 percent year-on-year to Rs.4.4 billion with the interest income growing at a faster rate than the interest expenses.
The net interest margin weakened to 4.18 percent, from 4.24 percent nine months ago.
The net fee and commission income rose 14 percent YoY to Rs.1.1 billion.
The banking group also reported other income of Rs.400.1 million for the quarter under review, down 4.5 percent YoY.
Other income captures the net losses from trading activities, net fair value gains of financial instruments, net gains on foreign exchange transactions and other operating income.
The impairment charges for the quarter rose 79 percent YoY to Rs.1.4 billion.
For the nine months ended September 30, 2019, the bank reported a credit growth of 7.75 percent, increasing the advances to Rs.352 billion, from Rs.327 billion in December 2018.
The deposit base grew from Rs.358 billion to Rs.377 billion.
The bank’s CASA ratio stood at 28.40 percent.
Seylan Bank’s gross non-performing loans ratio increased to 6.73 percent, from 5.98 percent nine months ago, indicating a deterioration of the bank’s asset quality.
Meanwhile, for the nine months period, Seylan Bank reported a net profit of Rs.2.5 billion, unchanged from a year ago.
The bank’s Common Equity Tier I Capital Ratio stood at 9.55 percent, as at September 30, 2019, on which the minimum requirement is 7 percent and the total capital ratio was 13.24 percent, on which the minimum requirement is 12.5 percent.
The bank said it has received in principle approval from the Colombo Stock Exchange to proceed with a rights issue with the objective of supporting balance sheet growth and meeting the capital adequacy requirements.
The government, via Sri Lanka Insurance Corporation, the Employees’ Provident Fund, Bank of Ceylon and the Employees’ Trust Fund Board, holds a 34.49 percent stake in the bank while Brown & Company and LOLC Investments Limited in concert hold a 23.42 percent stake, being the second largest shareholder of the bank.
National Development Bank PLC also has an 8.72 percent stake in the bank.