|
Spurred
by best results Sampath unveils growth strategy
Pre-Tax
profit up 15.6% and crosses Rs. 2.5 b mark for the first
time
By
Santhush Fernando
Sampath Bank PLC has embarked on an ambitious
growth path in a bid to increase its market share.
 “We
are proud to say that we were able to record the best
results presented by a bank so far. We have adopted
a three year Action Plan to increase our core banking
strength as well as to enhance the Bank’s organic
growth path. We will focus on increasing our market
share and profitability,” Sampath’s Chief
Financial Officer (CFO) Ranjith Samaranayake said at
the Investor Forum, to launch Sampath Bank’s Annual
Report.
“We have been able to improve all key performing
indicators of the Bank in the year under review. In
terms of profitability, liquidity and capital adequacy
we have surpassed all industry averages.”
“Pre
Tax Profit of Bank, crossed the Rs. 2.5 Bn. mark for
the first time and reached Rs. 2.564 Bn in 2008, as
against Rs. 2.218 Bn in 2007. This amounted to a pre-tax
growth of Rs. 346 Mn. or 15.6%, as against the negative
growth of 2.2% recorded in 2007. Bank’s Post Tax
Profit for 2008 amounted to Rs. 1.414 Bn, as compared
to Rs. 1.052 Bn. for 2007, which reflected an increase
of Rs 362 Mn. or 34.4%, as against the moderate growth
of 2.3% in 2007.”
“Pre Tax Profit of the Sampath Group, which consists
of the Bank, its 6 subsidiaries and an overseas Associate
Company rose to Rs. 2.787 Bn in 2008, from Rs. 2.384
Bn in 2007 recording a growth of Rs. 403 Mn or 16.9%,
as against the negative growth of 0.5% in 2007. Post
Tax Profit of the Group crossed the Rs. 1.5 Bn mark,
reaching Rs. 1.525 Bn in 2008, as against Rs. 1.201
Bn in 2007. This amounted to a Post Tax Profit growth
of Rs. 324 Mn or 26.9% for the Group as against the
growth of 6% in 2007.”
“The Bank was able to improve Return on Assets
(ROA) from 0.9% in 2007 to 1.04% in 2008. Return on
Equity (ROE) improved from 13.84% in 2007 to 15041 %
in 2008. The Bank’s total Capital Adequacy Ratio
which was computed under Basel II, marginally improved
to 11.95% as at end of 2008, compared to the total Capital
Adequacy Ratio of 11.58% as at the end of 2007 and was
well above the required 10%.
Despite these many challenges, Sampath Bank recorded
moderate growth rates for deposits, advances and total
assets in 2008, as compared to those in 2007, which
are very likely to be in line with the industry trends
in 2008.
The Bank’s ability to record a significant growth
in profits, with net interest income becoming the single
largest contributor, which recorded an increase from
Rs 5.0 Bn in 2007 to Rs 6.6 Bn in 2008, which amounted
to a growth of Rs 1.6 Bn or 32.9%. Timely pricing and
re-pricing of products in a volatile market, coupled
with timely channeling and re-channeling of funds to
more remunerative areas and Dollar / Rupee currency
swaps undertaken have played a major role in improving
the net interest margin of the Bank in 2008. Commission
/ Fee Based of the Bank rose from Rs 1.944 Bn in 2007
to Rs 2.144 Bn in 2008, reflecting a growth of Rs 200
Mn or 10.3% over the previous year. Foreign Exchange
income rose from Rs 505 Mn in 2007 to Rs 647 Mn in 2008
recording a growth of Rs 142 Mn, as against the negative
growth of Rs 141 Mn in 2007. “This significant
growth of 28.1 % in foreign exchange income was mainly
due to the improvement in revaluation gains to the tune
of Rs 216 Mn in 2008, as against Rs 48.0 Mn in 2007,
on the retained profits of the Bank’s FCBU maintained
in US Dollars, plus the depreciation of Sri Lanka Rupees
against the US Dollar from Rs 108.65 at the end of 2007
to Rs 113/- at the end of 2008.” He said.
“In the light of these improvements in the main
income sources, the total net income of the Bank rose
by 26.7%, which far exceeded the growth rate of 15.5%
recorded in the net income of 2007.”
In line with the general trends in the market, the NPL
ratio of the Bank (net of interest suspended on overdrafts)
rose to 7.5% as at end of 2008, compared to 6.7% as
at end of 2007. Nevertheless, the Bank was able to manage
the net charge on loan losses at Rs 809 Mn in 2008,
as against Rs 936.9 Mn in 2007, utilizing partially
the excess provisions carried against pawning advances
to the tune of Rs 241.9 Mn.
The Bank had been able to establish 114 branches / service
outlets by the end of 2008. There were 9 Branches opened
in 2008, including 3 branches in the newly liberated
Eastern Province, namely Akkaraipattu, Kalmunai and
Batticaloa. This branch expansion drive is expected
to continue in 2009, whilst due attention being paid
to promoting other low cost delivery channels as well.
In view of the good performance of the bank for 2008,
the Directors proposed a first and final Dividend of
Rs 4/- per share, as against Rs 3/- per share for 2007,
which was the highest to be declared by the Bank in
its 22 years of existence.
In 2008, Sampath Bank witnessed a major management change,
with I.W. Senanayake, Sunil Wijesinha and Harris Premaratne
taking over as Chairman, Deputy Chairman and Chief Executive
Officer respectively. In addition, CEO Harris Premaratne
along with Aravinda Perera (Chief Operating Officer)
and CFO Ranjith Samaranayake were appointed as Executive
Directors.
“Our slogan is ‘Deliver best value to customer
at all times’. We forecast growth based on defined
financial Key Performance Indicators (KPIs).” Among
Sampath Bank’s financial KPIs for 2008/09 include
Annual Post Tax profit growth – over 20 %; Return
on Equity (RoE) – over 18 %; Return on Assets –
over 1.25 % and Total Capital Adequacy Ratio –
over 12.5 %
|
