Provision reversals, non-fund incomes lift Sampath Bank March performance

Sampath Bank reported some robust financial performance in the quarter ended in March 2025 on the back of mainly the non-fund incomes as the net interest income slightly eased due to the decline in the interest rates and the underwhelming performance in loans.  

The bank reported a net interest income of Rs.20.46 billion for the January – March quarter, up 5.0 percent from the same period in 2024. 

The bank attributed this to the fast descent seen in the average weighted prime lending rate – the rate which acts as a benchmark for most of the lending rates in the bank.Further the yields of the government securities also fell sharply in the first quarter before bottoming out slightly in the recent weeks.

The bank saw their gross loans and advances portfolio contracting by Rs. 4.84 billion in the first three months, predominantly due to the contraction in the foreign currency loans by Rs.10.0 billion.

However, from industry standards the bank’s performance in lending has been unsatisfactory as most banks recorded some solid growths in their gross loans in the first three months of the year.

Harsha Amarasekera  – Chairman	Ayodhya Perera  – Managing Director

The bank instead added short-term investments as their holdings of rupee denominated treasury bills rose by Rs.28.0 billions. It further expanded its US treasury bills by a rupee equivalent of Rs.19.0 billion during the three months.

The descent in the interest yields narrowed the net interest margin of the bank to 4.32 percent from 4.90 percent by the end of 2024.

The bank meanwhile expanded its deposit base by Rs. 70.81 billion to Rs.1.53 trillion, reflecting the still prevailing appetite for bank deposits despite the rates remaining at lower levels.

The low cost deposits measured by the Current and Savings Accounts ratio edged up to 34.4 percent from 34.0 percent at the end of 2024.

Meanwhile the bank’s net fee and commission income rose by a modest 8.0 percent to Rs.4.97 billion from a year earlier period. These incomes have been led by the incomes from cards, credit and trade related activities.

Another highlight of the bank’s performance was the reversal in impairments or the provisions made for possible bad loans and other financial assets losses.

Such reversals were booked at Rs. 173.57 million in the quarter from provisions of Rs.4.41 billion in the year earlier period.

“The bank recorded a 102 percent decline in the impairment charge against loans and advances during the reporting period. This notable reduction was primarily due to improved customer credit quality, the bank’s proactive provisioning strategy adopted in previous years, and the stabilisation of key high-risk sectors supported by the broader recovery of the country’s economy”, the bank said releasing its interim report.

Meanwhile the non-finding incomes which mainly lifted the bank’s overall performance were supported by the Rs.2.88 billion of trading gains which came from the sale of treasury bills and bonds.

The bank reported a corresponding quarter loss of Rs.4.49 billion under the same line item.

This was further supported by the Rs.1.2 billion of exchange gains which was possible from the depreciation in the rupee against the dollar by Rs.3.02.

In this backdrop, the bank reported earnings of Rs.7.61 a share or Rs.8.92 billion for the March quarter compared to Rs.3.23 a share or Rs.3.79 billion in the same period in 2024.

The state-managed private sector pension fund, the Employees Provident Fund has 9.97 percent stake in Sampath Bank being its fourth largest shareholder as of March 31, 2025.