Lower impairment charges boost Seylan Bank 3Q earnings

Seylan Bank PLC reported higher earnings for the quarter ended September 30, 2023 (3Q23) amid sharp decline in impairment charges, the interim financial accounts released to the Colombo Stock Exchange, showed.
The banking group reported earnings of Rs.3.21 per share or Rs.1.97 billion for 3Q23, compared to earnings of Rs.1.69 per share or Rs.1.05 billion reported for the corresponding quarter, last year.
The banking group reported a net interest income of Rs.10.18 billion for the quarter under review, down 9.1 percent year-on-year (YoY) as interest expenses rose faster compared to interest income amid the higher interest rate environment.
The net fee and commission income rose 7.3 percent YoY to Rs.1.87 billion.

The banking group’s total operating income for the quarter fell 5.2 percent YoY to Rs.12.88 billion.
The impairment charges on possible bad loans fell sharply by 48 percent YoY to Rs.3.88 billion, which gave a boost to the banking group’s bottom line.
“The Bank has ensured the impairment provision is made to capture the changes in the macro economy, credit risk profile of customers and the credit quality of the Bank’s loan portfolio in order to ensure adequacy of provisions recognized in the financial statements,” Seylan Bank said in a press release. 
The total operating expenses of the banking group rose 25.2 percent YoY to Rs.4.76 billion amid a 23.6 percent YoY rise in personal expenses to Rs.2.5 billion.
Meanwhile, for the nine months ended September 30, 2023, the Seylan group reported earnings of Rs.7.27 per share or Rs.4.47 billion compared to earnings of Rs.4.05 a share or Rs.2.49 billion reported for the corresponding period of the previous year.
Seylan Bank’s loan book stood at Rs.411.8 billion as at end of September 30, 2023, a 7.29 percent contraction from the end of 2022. The bank said the de-growth was mainly due to the impact from local currency appreciation. 
The total assets of the bank were Rs.693.2 billion, up 3.04 percent.
The bank’s deposit base grew 3.17 percent during the nine-month period to Rs.564.6 billion.

The bank’s bad loans ratio (Stage 3) stood at 5.56 percent as at September 30, 2023, compared to 4.98 by the end of 2022.
As of September 30, 2023, the capital adequacy ratios of the bank were well above the regulatory minimum requirements and recorded 11.76 percent as Common Equity Tier 1 Capital Ratio & Total Tier 1 Capital Ratio and 15.29 percent as the Total Capital Ratio.  Employees’ Provident Fund has a 9.86 percent voting stake in Seylan Bank.