Pan Asia Bank reports solid performance for June as bank accelerates loan growth

Aravinda Perera- Chairman	Naleen Edirisinghe – Director, CEO

Pan Asia Banking Corporation PLC reported some robust financial performance for the June quarter on the back of a faster growth in loans and lower provisions against possible bad loans.

The bank reported a net interest income of Rs.3.23 billion for the April – June quarter, up 9.0 percent from the same period a year ago.

This was possible from the 5.0 percent decline in the interest expenses while the interest income remained steady between the two periods as the bank navigated the declining interest rates environment quite judiciously.

This was seen from its net interest margin – what the bank receives from its loans and what it pays for its deposits – at 4.68 percent at the end of the June quarter, slightly up from 4.62 percent from March levels but down slightly from 4.93 percent at the start of the year.

Lower interest rates weigh on banks’ margins but make possible a higher growth in the loans as lower borrowing costs create an appetite for loans from the borrowers.

The bank expanded its outstanding loans and advances by a robust Rs.15.42 billion in the second quarter, bringing the total expansion in the loan book in the first six months to Rs.22.41 billion. This translated to a 13.9 percent growth in the loan book.

The bank had a loan book with the size of Rs.183.29 billion by the end of June 2025.

Despite the loans growing at a robust pace, the bank provided only Rs.180.96 million for possible bad loans which was down from Rs.401.44 million in the year earlier period.

It was seen that the banks which reported their June quarter results so far having provided much less on account of possible bad loans than what they had provided in the same period last year.

This was possible due to improving economic conditions amid declining interest rates which in turn improved the borrowers’ repayment capacity.

Higher confidence by the banks on the borrowers’ ability to repay their loans results in lower impairment provisions in the banks’ income statements.

Meanwhile, asset quality too improved with the Stage 3 loans ratio 2.39 percent from 3.10 percent at the start of the year.

The bank raised deposits worth of Rs.12.76 billion to end the quarter with a total deposit portfolio of Rs.204.05 billion.

The bank’s fee and commission income also rose by 42 percent to Rs.646.34 million on the back of the growth in loans and also trade and remittances related fee incomes.

Under this backdrop, the bank reported earnings of Rs.2.56 a share or Rs.1.14 billion for the June quarter compared to Rs.1.50 a share or Rs.662.08 million in the year earlier period.

Businessman Dhammika Perera has 29.99 percent stake in the bank by the end of June 2025. Bansei Securities Co., Limited, which held 15 percent stake being the second largest shareholder in the bank, disposed a third of its stake on July 14.