Just for ur info http://www.thesundayleader.lk/2011/05/01/sampath-opens-62-branches/
Sampath Opens 62 Branches
Sampath Bank continued with the growth momentum in 201l 1st quarter (1Q) by posting impressive results over the previous year. Sampath Bank’s pre-tax profit rose to Rs. 1,348.6 mn. in 1Q 2011, reflecting a 70.4% increase year on year (YoY). Bank’s post –tax profit recorded a 60.9 % YoY growth to Rs.898.8 mn. in 2011.
Increase in Bank’s operating expenses over the previous year was managed at Rs. 365.4 mn. or 24.8%, despite the additional expenditure incurred on account of the ambitious branch expansion programme, which entailed opening of 62 branches during the last two years ended 31.03.2011, new recruitments of over 600 staff to manage this expansion drive, higher number of staff promotions and the cost of annual wage increases given effect during the periods under review.
Currently Sampath Bank operates with a 178 branch network and 229 automated teller machines. The Bank opened 40 new branches during 2010, which was a record in Sri Lanka’s banking history plans are underway to continue with the accelerated branch expansion program in year 2011as well.
Meanwhile Sampath Bank Group’s financial results which comprise the Bank and four subsidiary companies were even better. Group 1Q pre-tax profit grew 71.3% YoY to Rs.1,460.8 mn. with Sampath Bank contributing the bulk (92%) as the Group’s main entity. Group post –tax profit grew 64.2% YoY to Rs. 992.5 mn. Marked performance improvements of all four subsidiaries during the review period facilitated recording this higher profit growth rate at group level in 2011.
Increased economic activity in the market and the rapid 42.2% growth achieved by the Bank in its lending activities during the one year period ended 31.03.2011 paved the way for generating a higher fee-based and commission income, which recorded a significant 45.6% YoY growth to Rs. 216.1 mn. in 1Q 2011. Nevertheless Exchange income recorded a negative 1.36% growth in 2011 largely due to the Rs. 36.9 mn. revaluation loss incurred in 2011 on FCBU’s retained profits as against the Rs. 26.0 mn. revaluation loss incurred in 2010. This was solely due to the appreciation of LKR against the US Dollar; from Rs 113.95 as at 31.03.2010 to Rs 110.40 as at 31.03.2011.
The Bank was successful in managing the net charge on loan losses in 2011. As a result of the Bank’s improving credit quality (as indicated by reducing NPL volumes and NPL Ratios, detailed elsewhere in this report), it was possible to reduce provisions made on specific loan losses to Rs. 153.2 mn. in 2011 (even with additional provisions totalling Rs.100.0 mn. included therein), as against Rs. 702.6 mn. made in 2010, which too was inclusive of additional provisions totalling to Rs. 517.4 mn. These additional specific loan loss provisions were made in line with the Bank’s policy of making such provisions against identified NPLs, ignoring the collateral held, aimed at improving Bank’s provision cover. As the Bank achieved an 88.9% Provision Coverage Ratio as at 31.12.2010, the need for such additional provisions was naturally low in 2011.
In addition, based on higher credit growth during the period, a further sum of Rs. 101 mn. was provided as Regulatory General Provisions on loan losses in 2011, the effect of which was however reduced by Rs. 90.4 mn., o/a of a reversal of General Provisions, resulting from the applicable rate being reduced from 0.9% to 0.8% in 1Q 2011.
On the other hand the Bank was successful in making recoveries against NPLs. Consequently it was possible to reverse previous loan loss provisions made to the tune of Rs. 402.9 mn. in 2011, as against Rs. 424.5 mn. reversed in 2010, which figure however was boosted by a single recovery of Rs. 331.9 mn. made in 2010.
The Rs. 275.9 mn. impairment provision made in 2010 on account of the investment in ordinary shares of Union Bank Colombo as instructed by CBSL was reversed & taken to profits of 1Q 2011, since Union Bank shares are now being listed on the Colombo Stock Exchange and are being traded.
Despite the rapid growth recorded in the Bank’s fund based operation as reflected by the 22.2% and 42.2% growth rates achieved during the one year period ended 31.03.2011. in deposits and advances respectively, Bank’s Net Interest Income recorded a Rs. 139.0 mn. YoY drop to Rs.2, 060.5 mn. in 2011. This was mainly due to the return on interest earning assets dropping at a faster rate than the drop in cost of funds on deposits, shrinking the Net Interest Margin (NIM) from 5.59% in 1Q 2010 to 4.22% in 1Q 2011, consequent upon the significant changes that took place in the market’s interest rate structure. However the Bank is in the process of taking effective strategies, aimed at improving NIMs in future.
In addition, reduced Financial VAT tax rates (reduced from 20% to 12.0%) and Corporate Tax (reduced from 35% to 28%), too helped to improve Bank’s post tax profits in 2011.
Improved profits paved the way for most of the Bank’s key financial ratios to record significant improvements over the previous year. Prudent lending practices which included the centralized credit model introduced recently, effective post-sanctioning monitoring systems and intensified recovery efforts against existing NPLs resulted in reducing Bank’s NPLs both in absolute and percentage terms. NPL volumes net of IIS which stood at Rs 7,003 mn. as at 31.03.2010 was reduced to Rs 5,275.9 mn. (24.66%) as at 31.03.211. Similarly Bank’s NPL Ratio was reduced to 3.64% as at 31.03.2011, from 6.89% one year ago, as against the industry’s average NPL Ratio of 5.3% as at December 31, 2010. In addition to the improvement made in the Provision Cover referred to above, the Bank’s Net NPL / Equity Ratio (Open Credit Exposure Ratio) too was reduced to 6.87% as at 31.03.2011 from 20.84% as at 31.03.2010. Furthermore, almost all profit- based Ratios of the Bank such as ROA, ROE and EPS recorded significant improvements.
Sampath also remained as one of the well capitalized banks, with the Tier I Capital Adequacy Ratio at 9.51% and Total Capital Adequacy Ratio at 11.41% as at 31.03.2011, despite the higher 42.19% credit growth recorded during the one year period ended 31.03.2011.
Bank’s total deposit and total asset bases grew by 22.2% and 24.55% respectively during the one year period ended 31.03.2011. The growth rates in the two areas during the 1Q 2011 were 7.84 % and 9.37 % respectively. In addition, growth in customer advances were phenomenal, with advances volumes recording a significant 42.2% growth during the one year period ended 31.03.2011 and 13.3% in IQ 2011.
Taking in to account of the bank’s better performance in 2010, Bank paid a final dividend of Rs.6.60 per share in the form of scrip dividend in addition to the interim Rs. 3 per share scrip dividend already paid. Even after the two share-splits, which increased the number of shares by 120% in 2010, Sampath share is currently traded at around Rs 285 p.s. This price is well above the re-stated Rs. 103.78 net assets value per share after the share-splits. In terms of market capitalization, Sampath Bank’s ranking on the CSE has now improved to 14th position, as against the 15th position held on 31.12.2010.
"Sampath Bank continued with the growth momentum in 2011` 1st quarter (1Q) by posting impressive results over the previous year. Sampath Bank’s pre-tax profit rose to Rs. 1,348.6 mn. in 1Q 2011, reflecting a 70.4% increase year on year (YoY). Bank’s post –tax profit recorded a 60.9 % YoY growth to Rs.898.8 mn. in 2011."
I think .. further expansion can be expected....