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Monday, February 28, 2011

Seylan net profit up 177 % to Rs.1.2 billion

*     Basic EPS of Rs.4.75 against Rs.2.89 in FY 09

*     Gross NPL of 21.4%; Net NPL 14.9%

*     Cost income ration of 61%

*     Provisions of Rs.1.5bn against Rs.2.4bn in FY 09

*     Deposit base of Rs.110.7 billion

"Seylan Bank, further establishing its position as the country's 'turn around brand' has completed an exceptional Financial Year 2010 (FY2010), recording a post tax profit over Rs.1 billion for the year, the bank's interim financial reports filed to the Stock Exchange show.

For the financial year 2010, Seylan's net profit rose 177 percent to Rs.1.2 billion from a year ago while the December quarter profits increased 1373 percent to Rs.390 compared with the corresponding quarter of the pervious year.

The main growth drivers of the company's performance were healthy interest margins, strong growth in its loan book, reduction in cost base and lower provisions helped by high loan recoveries.

Seylan's income during the period increased by 9.5% to Rs.10.4 billion mainly due to the healthy interest margins of 5.7% and the strong growth in the loans and advances portfolio by 13% to stand at Rs.91 billion at the end of FY2010.

Furthermore, the quality of the loan portfolio improved dramatically with Non Performing Loan (NPL) ratios improving substantially over the financial year. The Bank's Gross and Net NPL ratios stood at 21.4% and 14.9% respectively, well below what was reported at the end of FY2009.

Seylan Bank historically had much higher NPLs than its peer banks. However, with the changes that took place in the management in early 2009 and its recent performance suggest that the bank is aligning itself with the others in the industry. According to analysts the Seylan will see further improvements in NPL

Seylan net profit up 177 percent to Rs.1.2 billion
ratios as they expect higher recoveries going forward.

The operating costs of Seylan reduced marginally Year on Year (YoY) as a result of aggressive cost control measures taken by the bank since 2009. This has contributed in improving the cost to income ratio of the bank significantly to stand at 61% in FY2010 compared to 68% in FY2009.

In Sri Lanka the banking sector cost to income ratio stand around 60% much higher than its regional peers who manages to maintain cost income ratios of around 40%- 45%. Analysts believe that Seylan is well positioned to improve on this measure further in FY2011.

However the highlight of the year for Seylan has been the drop in provisions during FY2010 and sharp increase in recoveries. The specific provisions of the bank during the 12 month period stood at Rs.1.5 billion compared to Rs.2.4 billion in FY2009.

Meanwhile the recoveries shot up by 66% to Rs.1.1 billion. Banking experts said Seylan is showing signs of a strong recovery with critical factors such as loan growth, cost efficiency and loan book quality moving in the right direction.

source - www.dailymirror.lk