Sampath Bank Group said yesterday it has continued with the growth momentum that began in 2009 well into 2011, enabling it to post impressive results in many key areas over 2010.
At an investor and media forum announcing audited results for 2011 last night, Sampath Bank management said that overall it had fared better than the rest of the industry, including some of its main competitors.
Some of the key benchmarks above industry and competitor performance were 27% deposit growth, 35% increase in advances, low Non-performing loans ratio including considerable decline in absolute terms, specific provisioning coverage ratio and open credit exposure.
The Group pre-tax profit was up by 24.8% to Rs. 5,983.5 m with Sampath Bank contributing the bulk (93%) of the profit.
The post-tax profit of the Group for 2011, which amounted to Rs. 4,172.9 m, recorded a growth of Rs. 652.9 m or 18.5%, over the post-tax profit of Rs. 3,520 m for the last year.
The bank’s pre-tax profit of Rs. 5,579.8 m in 2011 reflected an increase of Rs. 1,078.1 m or 23.9% over the pre-tax profit of Rs. 4,501.7 m for 2010. The post-tax profit of the bank recorded a growth of 15.6% over the last year, rising from Rs. 3,302.7 m in 2010 to Rs.3,819.4 m in 2011.
Managing Director Aravinda Perera told the forum chaired by Chairman Dhammika Perera that having added 100 branches during the past three years, 2012 would see consolidation. “We have planned for 10 additional branches for this year and more if necessary. Some of the new branches opened in the past will start contributing to the bottom line from this year onwards,” he added.
Greater focus on core banking profit, venturing into merchant banking and insurance are among key priorities for 2012. “We will also tap the local and foreign market to raise funds to boost our Tier 2 Capital,” he added. Enhanced focus on human resources development following the induction of 697 new employees last year will be pursued in 2012 as well, Perera added.
Executive Director and Group CFO Ranjith Samaranayake emphasised that the bank in 2011 had continued to enjoy the momentum first experienced in 2009. “Between 2009 and 2011, we have laid the foundation for long-term profit growth as well as higher stakeholder returns,” he added. The key challenges faced by the bank included the narrowing of net interest margin from 5% in 2010 to 4.13% in 2011 and the mark to market losses on its trading portfolio held, which amounted to Rs. 189.6 m in 2011, as against the net gain of Rs. 333 m in 2010 and the significant increase of 25.5% in operating expenses. In addition, benefit of the reduced corporate tax rate from 35% in 2010 to 28% in 2011 was not reflected in full in the post tax profit growth rate of the bank. This was due to the effective tax rate for the previous year being low, consequent upon the significant quantum of tax free income realised in 2010. The effective tax rate for 2011 rose from 26.6% in 2010, to 31.5% in 2011.
NII, which is the main source of income representing about 61.6% of the total operating income, rose 5.8% to Rs. 9,017.9 m in 2011, despite the significant growth recorded by the bank in deposits, advances and total assets as referred to above.
This moderate growth in NII was largely due to the Net Interest Margin (NIM), which stood at 5% in 2010 dropping to 4.13% in 2011, off-setting a substantial portion of the interest benefit that would have otherwise accrued to the bank from the high growth in the fund base.
However, the bank expects the NIM to stabilise 2012 and consequently to record a better growth rate in NII in the years to come.
In 2011, the bank realised a capital gain of Rs. 427.7 m from the sale of 1.5 million scrip dividend shares received from Lanka Bangla Finance Ltd., as against Rs. 654.8 m realised from this source in 2010. It was not possible to sell the balance 1.8 million scrip dividend shares received, due to a temporary embargo prevailed on the selling of shares by parties holding more than 5%, in listed companies of Bangladesh. In addition, a capital gain of Rs. 376.8 m was realised by the bank in 2011, by selling the Visa/MasterCard shares held.
Operating expenses of the bank, rose by 25.5% to Rs. 8,041.4 m largely due to the incremental cost incurred in connection with the opening of 35 new branches in 2011and the increase of 697 in the staff cadre, which too was due to the expansion. Further, the additional expenditure incurred on the newly-introduced deposit insurance scheme amounted to Rs. 210.2 m. The cost increases expected in 2012 is expected to be much lower, since a moderation is expected in the branch expansion programme, given the fact that the bank’s branch network has now adequately covered most of the potential locations of the country.
In 2010, the bank adopted a new policy of providing up to 100% against certain identified NPLs, disregarding the values of collateral held, aimed at increasing the specific provision cover against NPLs. Consequently the specific provision cover against the NPLs rose from 54.3 % at the end of 2009 to 88.9% at the end of 2010, reaching one of the highest specific provision coverage ratios in the industry.
With this high specific provision cover against the NPLs, coupled with the one of the lowest NPL ratio of 3.95 % as at 31 December 2010, the bank’s balance sheet strength was further boosted.
Though the provision cover recorded a marginal decline in 2011 and stood at 77.3 % as at 31 December 2011, due to the recoveries made against them in 2011, the specific provision cover still remained at high levels, compared to the industry average of 45 % on 31 December 2011. Together with the general provisions, the total provision coverage ratio of the bank stood at 90.6 % as at 31 December 2011.
With a low NPL ratio of 3.95% and high provision cover of 88.9 % at the beginning of the year 2011, the need for specific provisions become naturally low and consequently the charge on specific provisions in 2011 amounted to Rs. 319.8 m, as against Rs. 1,764.8 m made in 2010. The additional loan loss provisions included in both figures amounted to Rs. 100 m in 2011 and Rs. 1,344.9 m in 2010.
As a key strategy for achieving ambitious growth targets set in the budget, the bank continued with its accelerated branch expansion program, with the opening of 35 new branches throughout the country in 2011, thus becoming the bank to have opened the highest number of new branches for the third consecutive year. In 2009 and 2010 too, the bank maintained the same record by opening 19 and 40 new branches respectively. Consequent upon this expansion drive, the bank achieved a wide network of 206 branches by the end of 2011, with 203 branches on a fully-pledged basis.
Sampath Bank also continued with its strong organic business growth momentum in 2011, as reflected by the sound growth recorded in deposits, advances and total assets, surpassing the industry averages as below. The rapid growth in advances was not at the expense of credit quality.
source - www.ft.lk
No comments:
Post a Comment