HNB Group post tax profit increased
Hatton National Bank PLC, recorded a pretax profit of Rs. 2.89 billion in H1 2010 in comparison to Rs. 2.72 billion in the corresponding period 2009 despite pressures on interest margins, while the post tax profit of the bank improved to Rs. 1.79 billion during the 6 months under review from Rs. 1.77 billion in the first 6 months of 2009.
Commenting on the key contributors to growth Chief Financial Officer of HNB Ajantha de Vas Gunasekara stated that, “with the re-pricing of assets and liabilities, the interest income fell by 15% to Rs.15.06 billion during the first 6 months of 2010, while a sharper decline of 29% was witnessed in interest expense. This resulted in the net interest income improving by 5% during the period, and due to aggressive asset liability management, the Bank was successful in achieving a healthy net interest margin of 6.2% during the period”.
Non interest income recorded an increase of 20% to Rs. 2.43 billion on account of capital gains on investments held in Commercial Bank of Ceylon PLC and Distilleries Company of Sri Lanka PLC although foreign exchange income dropped by 13% to Rs. 415.8 million. The non interest expenses during the period increased by 14% largely due to the revision of salaries in 2009.
HNB Group posted a pretax profit of Rs.3.04 billion in H1 2010 up by 13% compared to first 6 months in 2009 while the Group post tax profit increased to Rs. 1.89 billion from Rs.1.72 billion in June 2009 supported by the positive performance of the Group companies viz. HNB Assurance PLC, Sithma Development (Pvt) Ltd, Acuity Partners (Pvt) Ltd. The performance of the group in Q2 2010 was outstanding with post tax profit recording a growth of 23% quarter on quarter.
The total asset base grew to Rs. 286.2 billion as at end of June 2010 from Rs. 280.6 billion as at end December 2009 primarily driven by the loan growth. The demand for credit improved on the backdrop of low interest rates and more conducive investment climate with the gross loans and advances reaching Rs. 180.2 billion as at end of H1 2010 up by Rs.3.6 billion from end of December 2009. The gross non performing advances ratio stood at 6.5% while the net non performing ratio was at 3.3% respectively as at end of June 2010. The Bank managed to improve the provision cover to 49% as at end of H1 2010.
The deposit base recorded a growth of approximately Rs. 2.6 billion to Rs. 216.5 billion over the first six months of 2010 in spite of low deposit rates. A shift in deposit mix towards low cost deposits was witnessed over the period under review backed by the strong deposit brands of the Bank.
The core capital adequacy ratio and the total capital adequacy ratio stood at 10.40% and 12.31% respectively as at June 30, 2010.
HNB voting and non-voting shares recorded gains with the closing voting share price increasing by 65% to Rs. 281 from Rs. 170/25 as at end of December 2009 and the non voting share recording a gain of 82% from Rs. 104.75 to Rs. 190.25 as at June 30, 2010.
The Bank is focussed on capturing opportunities with the economic resurgence of the country; accordingly, HNB is in the process of building capacity and expanding delivery channels to cater to the growth. During 2010 HNB has opened 5 customer centres increasing the total distribution network to 191 and projects to open 15 more customer centres during the latter part of this year.