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Sampath Bank recorded a profit after tax growth of 67.5% during the first half of 2014. The post –tax profit of the bank during the 1H 2014 was Rs 2.68 billion, as compared toRs 1.6 billion, achieved in the corresponding period in 2013.
"Apart from the drop in net charge against pawning advances (interest losses at auctions and impairment) by Rs 407 millionn, strong improvements in net fee and commission income (Rs 273 million), net trading income (Rs 225 million), other operating income (Rs 184 million) and drop in individually significant impairment charge (Rs 278 million), contributed towards this improvement in profits. Sampath Bank Group recorded a profit after tax of
Rs 2.82 billion for the six month ended 30 June 2014, a growth of 66% compared to
Rs 1.69 billion a year ago," the bank said in a statement.
"NII, which is the main source of income from the fund based operations and representing over 63% of the total operating income, decreased from Rs 6,871 million in the 1H 2013 to
Rs 5,261 million in the 1H 2014, recording a drop of 23.4%. This drop in NII was largely due to the incurred interest loss from auctioned pawned articles during the period which amounted to
Rs 2,528 million. In addition, gradual drop in the volume of high yielding pawning advances granted in the past, and industry wide slow credit growth coupled with the down-ward pressure on interest margins also caused the drop in NII.
"Net fee and commission income of the bank totalled Rs 1,478 million for the six month ended 30 June 2014, which is an increase of 22.7% over the six month ended 30 June 2013. This growth was mainly in line with growth of business volumes in the trade related services, card operations and inward remittances.
"Other operating income recorded an increase of
Rs 1,83.9 million from
Rs 1,054 million in the first six months of 2013 to Rs 1,238 million for the corresponding period this year. The major contributory factors for this increase are higher bad debt recoveries and Exchange Income from currency notes operations.
"Operating expenses of the bank which stood at Rs 5,036 million in the first six months 2013 rose to Rs 5,640 million during the same period in 2014, recording an increase of Rs 604 million (12%).
This growth in operating expenses was largely due to increase in staff cadre coupled with salary increments given to the staff with effect from 1 April 2014. Since the bank has now adequately covered most of the strategic locations of the country, only a moderate expansion of its branch network is expected in the coming years. This will also help to manage the increase in costs.
"The individually significant impairment charge dropped by Rs 278 million. In addition, total collective impairment reversal amounted to Rs 1,668 million in the 1H 2014, compared to a charge of Rs 1,119.6 million a year ago. This was mainly due to the reversal of collective impairment made against the pawning advances in 2013, owing to the slight increase in gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier. The impairment reversal against the pawning portfolio for the half year amounted to Rs 1,736.3 million, as against a charge of Rs 989.5 million in the 1H 2013.
"We continued to reduce the pawning portfolio (including interest receivable) in view of the volatility in gold prices which impacted the entire financial services sector since April 2013. The Bank's pawning advances which stood at 19.7% of the total advances as at 31 December 2013 was reduced to 12.9% as at 30 June 2014," the bank said.
"Total deposits as at 30 June 2014 stood at Rs 321 billion with a growth rate of 6.1% compared to total deposits as at 31 December 2013. Bank's total assets and total advances as at 30 June 2014 stood at Rs 385 billion and Rs 254 billion respectively which was a growth of 0.9% and a decline of 2.4% respectively compared to the figures reported as at 31 December 2013. The marginal growth in total assets was mainly due to the repayment of the syndicated loan of US$ 100 million during the period. The negative growth of customer advances was mainly due to reduction in pawning advances. . However, the advances other than pawning recorded a growth of Rs. 10.9 billion during the period, despite the low credit demand experienced in the market.
"Apart from the drop in net charge against pawning advances (interest losses at auctions and impairment) by Rs 407 millionn, strong improvements in net fee and commission income (Rs 273 million), net trading income (Rs 225 million), other operating income (Rs 184 million) and drop in individually significant impairment charge (Rs 278 million), contributed towards this improvement in profits. Sampath Bank Group recorded a profit after tax of
Rs 2.82 billion for the six month ended 30 June 2014, a growth of 66% compared to
Rs 1.69 billion a year ago," the bank said in a statement.
"NII, which is the main source of income from the fund based operations and representing over 63% of the total operating income, decreased from Rs 6,871 million in the 1H 2013 to
Rs 5,261 million in the 1H 2014, recording a drop of 23.4%. This drop in NII was largely due to the incurred interest loss from auctioned pawned articles during the period which amounted to
Rs 2,528 million. In addition, gradual drop in the volume of high yielding pawning advances granted in the past, and industry wide slow credit growth coupled with the down-ward pressure on interest margins also caused the drop in NII.
"Net fee and commission income of the bank totalled Rs 1,478 million for the six month ended 30 June 2014, which is an increase of 22.7% over the six month ended 30 June 2013. This growth was mainly in line with growth of business volumes in the trade related services, card operations and inward remittances.
"Other operating income recorded an increase of
Rs 1,83.9 million from
Rs 1,054 million in the first six months of 2013 to Rs 1,238 million for the corresponding period this year. The major contributory factors for this increase are higher bad debt recoveries and Exchange Income from currency notes operations.
"Operating expenses of the bank which stood at Rs 5,036 million in the first six months 2013 rose to Rs 5,640 million during the same period in 2014, recording an increase of Rs 604 million (12%).
This growth in operating expenses was largely due to increase in staff cadre coupled with salary increments given to the staff with effect from 1 April 2014. Since the bank has now adequately covered most of the strategic locations of the country, only a moderate expansion of its branch network is expected in the coming years. This will also help to manage the increase in costs.
"The individually significant impairment charge dropped by Rs 278 million. In addition, total collective impairment reversal amounted to Rs 1,668 million in the 1H 2014, compared to a charge of Rs 1,119.6 million a year ago. This was mainly due to the reversal of collective impairment made against the pawning advances in 2013, owing to the slight increase in gold prices in the world market and auctioning of unredeemed pawning articles for which provision had been made earlier. The impairment reversal against the pawning portfolio for the half year amounted to Rs 1,736.3 million, as against a charge of Rs 989.5 million in the 1H 2013.
"We continued to reduce the pawning portfolio (including interest receivable) in view of the volatility in gold prices which impacted the entire financial services sector since April 2013. The Bank's pawning advances which stood at 19.7% of the total advances as at 31 December 2013 was reduced to 12.9% as at 30 June 2014," the bank said.
"Total deposits as at 30 June 2014 stood at Rs 321 billion with a growth rate of 6.1% compared to total deposits as at 31 December 2013. Bank's total assets and total advances as at 30 June 2014 stood at Rs 385 billion and Rs 254 billion respectively which was a growth of 0.9% and a decline of 2.4% respectively compared to the figures reported as at 31 December 2013. The marginal growth in total assets was mainly due to the repayment of the syndicated loan of US$ 100 million during the period. The negative growth of customer advances was mainly due to reduction in pawning advances. . However, the advances other than pawning recorded a growth of Rs. 10.9 billion during the period, despite the low credit demand experienced in the market.
