Amana Bank PLC increased its net profits by 66 percent year-on-year (yoy) to Rs.38.2 million or 3 cents a share as the bank performed well on its core banking and other income businesses, but the margin slipped, the interim results showed.
The net finance income or the finance income on its assets above the finance expense for its deposits and other liabilities rose by 14.9 percent yoy to Rs. 408.6 million as the finance income rose by 30.7 percent while the finance expense fell by 49.2 percent yoy.
But the financing margin which is equivalent to the net interest margin in the general banking jargon slipped to 3.3 percent from 3.6 percent in December 2015.
The financing and receivables during the three months grew by 4.8 percent or Rs.1.6 billion to Rs.34.9 billion. During the quarter the bank crossed Rs.50 billion asset base to end at Rs.50.8 billion, up 6.2 percent.
The quality of its portfolio improved as the gross non-performing loan ratio fell to 0.91 percent from 0.92 percent.
The deposits grew by 9.3 percent or Rs.3.6 billion to Rs.42.2 billion. Amana is entirely funded by deposits and has a 50 percent current and savings account base.
“This sustained performance of ours is owing to our strong customer engagement, business alignment, service focus, processes improvement, cost containment and optimization of resources while managing the overall risk which is in line with our strategic plan,” said Mohamed Azmeer, the bank’s Chief Executive Officer releasing a statement.
Amana - the first Sharia-compliant bank in Sri Lanka –which operates based on a non-interest based model, started operations in 2011. The bank went public in January 2014 and operates with a 0.5 percent of total banking assets by the end of 2014.
The bank last year received Central Bank approval for a deferred deadline to enhance its minimum capital to Rs.10 billion from its original January 01, 2016.
By March end the bank’s core capital stood at Rs.4.9 billion but it has to be raised up to Rs.7.5 billion by January 1, 2017 and Rs.10 billion by January 1, 2018 to stay in line with the regulator’s minimum capital rules.
Tier I capital adequacy ratio stood at 11.4 percent with a significant margin of safety from the 5 percent minimum required but the Tier II was at 11.8 percent, closing in regulatory 10 percent minimum.
The net fee and commission income rose by 38.2 percent yoy to Rs.47.6 billion.
The net gain from the bank’s trading portfolio rose by 64.2 percent yoy to Rs.121.7 million.
Total operating expenses rose by 22.2 percent to Rs.482.4 million.
Bank Islam Malaysia Berhad and AB Bank Limited in Bangladesh hold 14.44 percent stake each in the bank followed by Akbar Brothers (Pvt) Ltd with another 9.98 percent and Islamic Development Bank in Sadi Arabia with 9.62 percent stake as of end March 2016.