PABC earnings up in 1Q25 as impairments fall, core income climbs

Aravinda Perera – Chairman

Pan Asia Banking Corp (PABC) reported a strong financial performance for the quarter ended March 2025, supported by loan growth, higher fee income and reduced impairment charges.

The bank reported a net interest income of Rs.3.04 billion for the January - March quarter, up 5 percent from the same period last year as the interest expense fell at a faster pace than the fall in the interest expense due to lower rates. 

The interest income declined by 9.0 percent to Rs.7.40 billion in the quarter despite the growth in loans while the interest expense fell by 17.0 percent to Rs.4.37 billion, albeit the deposits grew in tandem with the growth in loans. 

As a result the net interest margin narrowed to 4.62 percent from 4.93 percent at the end of last year. 

The bank’s gross loan book grew by Rs.6.99 billion to Rs.167.88 billion and the deposits grew by Rs.6.53 billion to Rs.197.83 billion. 

Despite the growth in loans, the bank provided Rs.122.86 million for possible bad loans or impairments compared to Rs.333.31 million in the same period a year ago. This marked a 63 percent decline between the two periods. 

Naleen Edirisinghe - CEO

The December quarter saw the banks which held International Sovereign Bonds reversing large amounts as provision reversals providing a massive lift to the profits last year. 

For instance Pan Asia Bank reversed provisions worth Rs.5.44 billion in the December quarter last year, bulk of which was from the provisions made on the sovereign bond investments. 

The bank also saw its stage 3 loans ratio at 2.79 percent, among the lowest in the industry, coming down from 3.10 percent at the end of last year. This is despite the bank facing certain challenges from the restrictions on recoveries, the bank said. 

The bank reported earnings of Rs.2.30 a share or Rs.1.02 billion for the three months ended in March 2025 compared to Rs.0.82 a share or Rs.362.79 million reported in the same period last year. 

The net fee and commission income rose by 25 percent to Rs.497.24 million, came mainly from the loans and advances due to increased demand for credit and also from the trade and remittances.  

The efficiency level also improved as seen from the cost-to-income ratio which fell to 47 percent in the first quarter of 2025 from 52.68 percent in 2024.