Profit before VAT and Income Tax (before the exceptional VRS costs) for the nine months ending September 2011 was Rs. 1,424 Million. Profits after tax for the nine months increased to Rs. 1,604 million from Rs. 303 million recorded last year.
Despite controlled credit expansion, the bank’s strong performance continued to be driven by growth in its core banking operations. Net interest income increased by 12% to Rs. 6,418 million for Q3 2012, resulting from selective growth in quality advances and effective management of margins.
Despite challenging market conditions the bank was able to maintain its net interest margins at 4.95%, a slight improvement as compared to 4.91% in December 2011.
Non-interest income increased from Rs. 1,698 million to Rs. 1,816 million in the nine months of 2012.
This was achieved despite a general slowdown in import related activities, through diversifying into various other trade finance and cash management services.
During the nine months under review the bank maintained its focus on controlling its overhead costs.
The efforts on improving cost efficiencies have resulted in the improvement of the cost to income ratio to 67%, a reduction of six per cent from December 2011.
The bank grew its deposits base by Rs. 13.8 billion 15% (annualised) and the advances portfolio by Rs. 12.7 billion 14% (annualised) despite a fiercely competitive and rising interest rate environment.
Through focused and sustained recovery efforts the bank has reduced its NPA ratio (net of IIS) from 14.24% in 2011 to 12.99% by end Q3 2012.
General Manager/CEO Kapila Ariyaratne said: “The bank has set its sights on reducing this to a single digit by end 2013 through adding quality assets, rehabilitating troubled loans and through effective recovery strategies.”
During the nine months in 2012, the bank opened eight new branches/convenient centres and relocated 3 branches to more customer friendly locations. As at 30 September 2012, the bank network comprised of 139 branches/convenient centres and 145 ATMs.
The bank intends to increase the number of branches to 150 by 1Q 2013.
Preparing for future growth, the bank has planned for a debenture issue via a private placement in November 2012. The bank intends to invest on identified key areas which are in line with the bank’s future growth strategies including new product development, branch expansion, service quality improvement, staff training, and development and IT infrastructure.
Chairman of Seylan Bank Mohan Pieris, PC, stated: “We are focused on achieving our Strategic Plan, which we formulated in the latter part of last year. This year’s record performance is a testament that we are well on our way to achieve our targets. We have also taken steps to improve our capital and governance structures for future growth that has been planned.”
As a result of the strong nine months profits posted, earnings per share were at Rs. 6.33 (annualised), while return (profit before tax) on assets and return on equity was at 1.93% and 11.87% respectively.
source - www.ft.lk
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