Sampath Bank 4Q net up 15% to Rs.1.53 billion over higher loan growth & other incomes

Sri Lanka’s third largest private sector commercial bank, Sampath Bank PLC group with an asset base of over Rs.500 billion saw its December quarter (4Q’15) net profits rising by 15.2 percent year-on-year (yoy) to Rs. 1.53 billion due to higher growth in loans to customers, non-fund based incomes and reduced provisions against possible bad loans, the interim results showed.

However on a quarter-on-quarter basis the net profit fell by 23 percent. Sampath Bank share traded a Rupee higher at Rs.234 at yesterday’s close. The Earnings Per Share (EPS) for the quarter rose to Rs.8.91 from Rs.7.74. the Return on Equity (RoE) improved to 18.42 percent from 16.35 percent in 2014. The Net Interest Income (NII) grew by 8.8 percent yoy to Rs.4.7 billion while the non-fund based incomes grew by 34 percent yoy to Rs. 2.24 billion.

“This growth was achieved through leveraging on non-fund based income sources such as credit and debit card operations, trade related services and other banking services,” the statement from the bank said. The banking group saw its gross loans and advances growing by 24 percent or Rs. 76.7 billion during the year to Rs. 384.6 billion. The group comprises its subsidiary licensed finance company, Siyapatha Finance PLC. The bank which had over 25 percent exposure levels to goldbacked loans three years ago has now narrowed its exposure to 3.5 percent by the end of 4Q’15 from 7.9 percent a year ago as a result of its deliberate efforts to trim the bank’s exposure to the precious metal of which the value was falling. Leasing portfolio grew by Rs.16.2 billion to Rs. 28 billion increasing the exposure level of the portfolio up to 7 percent from the total gross loans and advances.

The housing loans grew by Rs.5.6 billion to Rs. 20 billion. Import loans rose by Rs.6.9 billion and overdrafts grew by Rs.13.9 billion. The rapid growth in loans and advances had a bearing on the bank’s capital adequacy as both Tier I and Tier II capital adequacy ratios weakened to 7.9 percent and 12.26 percent from 8.83 percent and 13.62 percent a year ago

Meanwhile the bank expanded its asset base by 21.6 percent to Rs. 525.3 billion becoming the third largest private sector commercial bank after Commercial Bank PLC and Hatton National Bank PLC. The asset growth was largely funded by the growth in deposits which grew by Rs.67.5 billion to Rs. 407.2 billion. It is notable that the 53.9 percent or Rs.36.4 billion of the total deposit growth has stemmed from the low cost deposits – Current And Savings Account (CASA). The CASA ratio improved to 47.6 percent from 46.2 percent a year ago.

However the Net Interest Margin (NIM) narrowed to 3.64 percent from 3.95 percent a year ago. “The drop in NIM in 2015 was due to the falling market interest rates and drop in the higher yielding pawning portfolio in the asset-mix, which was done as part of the ongoing risk management strategy to achieve a healthier asset-mix,” the bank said in a statement. Meanwhile for the year ended December 31, 2015 the banking group posted a net profit of Rs. 6.62 billion (EPS of Rs.38.44), up 25.8 percent. The NII grew by 10.5 percent to Rs. 18.6 billion while the non-fund based incomes grew by as much as 41 percent to Rs. 8.2 billion. However the net trading income of negative Rs.341.3 million due to mark-tomarket losses made on foreign currency forward contracts revaluation and government securities portfolio and also due to the fall in prices in the Colombo Stock Exchange. Other operating income grew by 170 percent to Rs. 3.12 billion mainly due to the higher exchange gains. Further the key efficiency ratio, cost-toincome – without VAT and NBT – improved to 52.7 percent from 54.8 percent. Meanwhile the bank brought down its total impairment charge by 32.7 percent to Rs.943.6 million due to, “the bank’s ongoing risk management strategy to reduce the exposure to pawning has contributed towards this improvement,” the bank added. As of December 31, 2015 high net worth investor,

Dhammika Perera owned Vallibel One PLC held 14.95 percent stake being the single largest shareholder followed by Indra Traders’ owner, Y S H I Silva – 9.98 percent and Employees Provident Fund – 9.97 percent. Norges Bank, the world’s biggest sovereign wealth fund with about a trillion dollars invested in equities is now featured as the 19 largest shareholder of the group with a 0.6 percent stake.