The Bank’s pre-tax profit which rose to Rs 4,501.7 million in 2010 reflected an increase of Rs 525.5 million or 13.2 percent over the pre-tax profit of Rs 3,976.2 million for the year 2009.
The post tax profit of the Bank recorded a growth of 57.4 percent over the last year, rising from Rs 2,098.3 million in 2009 to Rs 3,302.7 million in 2010.
A higher growth rate in post-tax profits than that in pre-tax profits, was made possible due to the tax free income accrued during the period, which included a capital gain of Rs 654.8 million, realized through the sale of bonus-shares received from Lanka Bangla Finance Ltd, a recovery against an impairment provision of Rs 1,331.4 million and an increase of Rs 333.02 million in mark to market gains on the trading portfolio of the Bank.
Consequently, the Bank’s tax charge for the period under review, decreased by Rs 678.9 million, despite the increase of 13.2 percent in pre-tax profits.
Financial results of the Sampath Bank Group, which consists of the Bank and four subsidiary companies, were even better.
Pre-tax profit of Rs 4,794.2 million of the Group for 2010 recorded a growth of Rs 789.3 million or 19.7 percent, over the previous year’s pre-tax profit of Rs 4,004.9 million, with Sampath Bank, contributing bulk (93.9 percent) of the profit as the main entity of the Group.
The post tax profit of the Group amounted to Rs 3,519.9 million, recording a growth of Rs 1,436.2 million or 68.9 percent, over the post-tax profit of Rs 2,083.8 million for the last year.
Marked improvements in the performance of all four subsidiary companies during the period under review facilitated to record a higher profit growth rate at the group level.
Other income of the Bank, bulk of which is Commission, recoveries and Fee-Based income, too recorded a growth of Rs 1,612.1 million or 38.0 percent in 2010 over 2009.
The only source of core-banking income, which recorded a negative growth (35.7 percent) in 2010, was exchange income, largely due to the revaluation loss of Rs 176.2 million, incurred in 2010 against the FCBU’s retained profits, as against the revaluation profit of Rs 67 million recorded in 2009.
This was solely due to the appreciation of the Rupee against the US Dollar, from Rs 114.47 as at 31.12.2009 to Rs 110.95 as at 31.12.2010.
The Specific Provision for Loan Losses of the Bank period for 2010 amounted Rs 1,764.8 million, as against Rs 324 million for the period of last year.
The resultant increase of Rs 1,440.7 million in specific loan loss provisions was mainly due to the Bank’s decision to make additional loan loss provisions as a prudential measure against certain identified NPLs, over and above the prevailing time-based provisioning requirements, ignoring the collateral held.
This move also helped the Bank to increase its Provision Cover (excluding the General Provisions) against the NPLs from 54.34 percent as at 31.12.2009 to 88.89 percent as at 31.12.2010, and it is well above the industry average of 59.5 percent.
In addition, an impairment provision of Rs 275.9 million was made on account of the investment in the ordinary shares of Union Bank Colombo, as instructed by CBSL, on the grounds that there has been no return from the date of investment.
source - www.dailynews.lk
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