HNB reports solid 3Q on robust loans, other incomes and provision reversals

Chairman Nihal Jayawardena	MD/CEO Damith Pallewatte

Hatton National Bank PLC (HNB) reported a strong 3Q performance on the back of a robust growth in new loans, fee and other incomes and provision reversals, as the bank grew confident about the borrowers’ debt serviceability.

The bank gave new loans worth Rs.137.47 billion in the three months through September, bringing the nine-month growth in loans to Rs.254.72 billion, at a 22.0 percent growth.

Against this backdrop, the bank reported a net interest income of Rs.29.14 billion, up 12.0 percent from a year ago, albeit the net interest margin slipping to 4.17 percent, from 4.86 percent at the end of last year.

The bank’s share ended 2.04 percent lower at Rs.420.00 at yesterday’s trading, as the investors, who piled into stocks during the last many sessions, decided to book profits.

the solid growth in loans, the bank could reverse their provisions made for possible bad loans by Rs.2.09 billion, compared to the provisions of Rs.1.82 billion in the year earlier period.

The asset quality also improved, as the stage three loans ratio came down to 1.36 percent by end-September, from 1.88 percent at the end of last year.

The bank reported earnings of Rs.19.30 a share or Rs.11.04 billion, compared to Rs.12.63 a share or Rs.7.22 billion in the corresponding period last year. This worked out to a 53 percent increase. The performance was also supported by some 37 percent increase in fee income to Rs.6.53 billion.

Lower trading losses and higher exchange income also helped the bottom line during the period. 

“This growth was primarily driven by the movement in exchange rate alongside a notable increase in foreign currency transactions, particularly due to the surge in vehicle imports during the period,” the bank said in a statement.

Meanwhile, the higher insurance premium at its insurance subsidiary also helped the group performance.

The bank mobilised deposits worth Rs.164.98 billion in the nine months to Rs.1.88 trillion.

The bank had a loan book with a size of Rs.1.41 trillion.

Ceylon Steel Corporation Limited held a 9.98 percent stake in HNB, while the government in concert held a 25.15 percent stake as of end-September.