People’s Bank reports consolidated pretax profit of Rs.11.4bn for nine months of FY23

• Consolidated gross income expands by 24.5% to Rs.345.2bn
• Continues to benefit from industry’s lowest exposure to foreign currency-denominated investments subject to external debt restructuring 
• Solvency, as measured by total capital adequacy, compares well with peers at 15.7%

People’s Bank yesterday announced the results for its nine-month period ended on September 30, 2023, with a total consolidated operating income and pre-tax profit of Rs.67.6 billion and Rs.11.4 billion, respectively.
Due to the higher cost of term deposit funding, which stemmed from the high interest rate environment that prevailed during much of 2022, the consolidated net interest income slipped to Rs.44.6 billion during the nine months ended on September 30, 2023.

The consolidated net fees and commission income amounted to Rs.10.8 billion, which excluding one-off items during 9M-22, represented a near 9.0 percent growth on a like-for-like basis. 
Reflecting rupee depreciation and inflation-driven cost pressures, much of which originated since 2Q22, the consolidated total operating expenses rose by 14.7 percent to reach Rs.45.9 billion. Relative to such upward cost pressures, this compared well also reflecting the bank and group-wide efforts for greater cost control and efficiency improvement at every instance so possible. 

Total consolidated customer deposits grew to reach Rs.2,652.6 billion - i.e., by 8.3 percent, whilst consolidated net loans contracted by 5.4 percent to Rs.1,812.1 billion. This reflected both the impact of the rupee appreciation on its foreign currency loan book relative to the end-2022 levels and more notably, the cautionary approach adopted by the bank when extending new credit, considering the yet stressed macro circumstances. Total consolidated assets stood at Rs.3,131.7 billion as at September 30, 2023.
The bank’s Tier I and total capital adequacy ratios were 11.6 percent and 15.7 percent, respectively as at September 30, 2023, whilst on a consolidated basis, it was 13.1 percent and 16.8 percent, respectively. The bank’s solvency levels continue to remain sound, ultimately showcasing efforts consistently made since the onset of Basel III on July 01, 2017. 
Further efforts to bolster its regulatory capital are currently ongoing. In addition, the bank has successfully met all its core regulatory measures during the said period, including amongst other, its liquidity ratios, which reached new highs across both rupee and foreign currency.
Commenting on the results of the bank and group, People’s Bank Chairman Sujeewa Rajapakse stated, “The country’s outlook currently hinges on the success of its external debt restructuring, fiscal consolidation and success in implementing several key structural reforms. Despite the many uncertainties, both macroeconomic and otherwise, our diversified portfolio and unique offerings have enabled us to positively contribute towards our overall performance during the first nine months of this year. One such example is our efforts to improve the overall foreign currency inward worker remittances for the benefit of the bank and ultimately the country. Such initiatives rolled out since early 2022 have enabled the bank to increase its market share to 18.0 percent, from just 6.0 percent at end-2022, which also testifies to the confidence placed in the institution by that remit.”

Commenting on the results, the bank’s Chief Executive Officer/General Manager Clive Fonseka stated, “We are making continuous strides in executing our operational plan, notwithstanding the many challenges posed by the external environment. Our digitalisation strategy remains at the heart of every internal thinking and decision-making process. Substantial improvement in our liquidity profile during the year-to-date period is one of our key accomplishments and with the economy showing positive signs of rejuvenation, we now remain focused on expanding our loan book in a measured manner. Needless to say, in doing so – as a responsible state organisation – we will focus on all areas of economic priority.”