Seylan Bank recorded a Profit after Tax of Rs. 1,504 Mn for the 6 months ended 30th June 2022 against Rs. 2,105 Mn reported in the corresponding period of 2021. This has been seen by financial analysts as commendable given the extremely challenging and adverse conditions the Bank operated in, with Sri Lanka facing its worst economic crisis since Independence, especially in Q2 this year.
Net Interest income increased from Rs. 10,971 Mn to Rs 16,851 Mn, a growth of 53.60% over the previous year for the 6 months ended 30th June 2022. The Bank’s net fee based income increased by 27.36% from Rs. 2,180 Mn to Rs. 2,776 Mn during 1H, mainly due to an increase in debit and credit card related income, commission income on e-banking, service charges on deposits and commission on remittances which were partly offset by decrease in guarantees related income and loans and advances related income.
Other income captions comprising net gains from trading activities, net gains from de-recognition of financial assets, net gains on foreign exchange transactions and other operating income increased by 37.20 % a net gain from Rs. 1,526 Mn from the correspondent year to a net gain of Rs. 2,093 Mn during 1H 2022. The net increase is mainly due to increase in mark to market net gain on derivative financial instruments and impact from net revaluation losses on FCY assets and liabilities.
Total expenses recorded an increase of 7.43 % from Rs. 6,750 Mn in the 1H of the previous year to Rs. 7,251 Mn for the 6 months ended 30th June 2022. Personnel expenses increased by Rs. 287 Mn mainly due to an increase in the staff benefits based on the collective agreement. Other operating expenses and depreciation and amortisation expenses too increased by 7.35% due to increase in prices of purchases and services as a result of higher inflation and local currency depreciation. However, the Bank will continue to take relevant measures to curtail costs with various cost initiatives.
The Bank recognised a total impairment charge of Rs. 11 Bn for Q2 2022 compared to Rs. 4 Bn reported in the corresponding period of last year, representing a 183.49% increase. The Bank increased the impairment provision to capture the impact on emerging global and local economic challenges and the credit risk profile of the customers.
The Bank reported a marginal growth of 5.83% in net loans and advances to Rs. 467,758 Mn during the period under review. Its overall deposit base increased from Rs. 488,653 Mn in December 2021 to Rs. 531,741 Mn in 1H 2022. The Bank’s CASA ratio (Current and Savings) stood at 31.92 %. Further the Bank’s asset base expanded by Rs. 58,902 Mn to Rs. 666,478 Mn.
Overall, with the reported performance during the six months, the Bank’s Earnings per Share (EPS) stood at Rs. 2.60. The Bank recorded a Return on Average Assets (ROAA) profit before tax of 0.64 % and Return on Equity (ROE) of 5.83 %. The Bank’s Net Asset Value per share as at 30th June 2022 was Rs. 89.26 (Group Rs. 92.46).
Seylan Bank remained soundly capitalised, with the key capital adequacy ratios well above the regulatory minimum requirements and recorded 10.18 % as total Tier 1 capital ratio and 13.54 % as the total capital ratio.
The Bank’s Liquidity Ratios are well within the statutory limits. The Statutory Liquid Assets Ratio (SLAR) of Domestic Banking Unit and Foreign Currency Banking Unit were reported as 25.97% and 21.28% respectively and the Bank’s liquidity coverage ratio of all currencies and Rupees were reported as 106.70% and 152.42% respectively.
The Banks’s Asset Quality Ratios of Impaired Loans (Stage 3) Ratio and the Impairment (Stage 3) to Stage 3 Loans Ratio stood at 4.36% and 47.65% respectively.
