Trading gains, lower impairments boost Pan Asia Bank 2Q

 Pan Asia Banking Corporation PLC reported higher earnings for the quarter ended on June 30, 2023 (2Q23), backed by trading gains from government securities, reduced exchange losses and lower impairment charges.
For the quarter under review, the bank reported a net interest income of Rs.2.5 billion, down 6 percent year-on-year (YoY), as interest expenses rose faster than the interest income, amid the increase in the bank’s deposit base and rates and the repricing effect of deposits. The net interest margin for the six months ended on June 30, 2023 (1H23), was 4.24 percent.

The bank’s deposit base stood at Rs.170.7 billion as at June 30, 2023, up 5 percent from six months ago.
However, the bank recorded a 7 percent degrowth in its loan book, which stood at Rs.133.9 billion as at June 30, 2023.

The net fee and commission income for 1Q23 declined 17 percent YoY to Rs.348.4 million “due to a drastic reduction in fee income generated from loans and advances, due to weak demand for credit”, the bank said.
Despite the subdued core banking performance, Pan Asia Bank was able to book Rs.759.2 million as net gains from trading, which is a 524 percent increase YoY, “mainly due to increased realised and unrealised gains from Government of Sri Lanka Treasury bills and Treasury bonds classified under Fair Value through Profit or Loss (FVPL)”, the bank said.

“The phenomenal growth in trading gains on rupee government securities was negated to some extent by the losses from the SWAP book during the first half 2023, mainly resulting from reporting high discounts in Forex SWAP agreements, which was at high premium in the first half 2022,” the bank added. 

The bank reported a reduction in other operating losses due to reduced exchange losses on impairment charges for loans and advances and other financial assets due to the appreciation of rupee against US dollar during 1H23.  For the quarter under review, the impairment charges fell 28 percent YoY to Rs.694 million and for the first half such fell 31 percent YoY to Rs.1.07 billion. The bad loans ratio or stage three loans ratio of the bank stood at 4.15 percent as at June 30, 2023, deteriorating from 3.63 percent six months ago. Pan Asia Bank reported earnings of Rs.1.36 per share or Rs.602.2 million for 2Q23, compared to earnings of 26 cents or Rs.116.1 million a year ago.
For 1H23, the earnings stood at Rs.2.09 per share or Rs.925.7 million, compared to earnings of Rs.75 cents or Rs.332.1 million a year ago.

Total assets of the bank improved to Rs.226.3 billion as at June 30, 2023, up 9 percent six months ago. The bank maintains all its capital and liquidity ratios well above the regulatory minimum standards. 
Commenting on the bank’s performance, Pan Asia Bank Director and CEO Naleen Edirisinghe said, “Our resounding performance in first half 2023 demonstrates that we are well on track to meeting our ambitious targets for the year. A growth of PAT of over 179 percent and 418 percent during 2023 1H and 2Q, respectively and affirms the efficacy of our strategy, which will be accelerated for generating greater earnings from core banking while infusing operational efficiencies. Despite difficult market conditions, Pan Asia Bank leveraged on its spirit of innovation and can-do spirit as one team to deliver this encouraging performance, which sets the stage for the rest of the year.” 
Billionaire businessman Dhammika Perera owns 29.9 percent of the issued shares of Pan Asia Bank.