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| Friday, 14 November 2003 |
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HNB Group profits net Rs 1.4 billion For the first time in its history, the HNB group has surpassed the Billion mark in its net profits. The HNB group has recorded a pre-tax profit of Rs. 1.381 billion and Profit After Tax of Rs. 1.144 billion. This is in comparison to Rs 413 million pre-tax profit and Rs 348 million. post tax profit achieved during the corresponding period of last year. The Bank itself has posted a pre tax profit of Rs 833 million and a post tax profit of Rs 673 million. This is in comparison to the pre tax profit of Rs 538 million and post tax profit of Rs 478 million made during the corresponding period in 2002. The results reflected a 55% increase in pre tax profits and a 41% increase in post tax profits. The improvement in the net interest income and substantial gains recorded in other income were the main contributory factors behind the improved profitability. The Bank's other income posted a near Rs 1BN growth compared to the previous period largely owing to gains made in the trading of government debt securities and quoted equities. The bank also posted significant gains in its foreign exchange income, which recorded and increase of 41%. However, the bank made significant loan loss provisions during the period largely on account of a few large relationships. The bank's provisions for the period was in excess of Rs 1 billion - a 227% increase over the previous period. A major portion of this provision is on account of a single relationship - a large textile manufacturer. The bank has already made substantial provisions to cover the unsecured portion of the debt in accordance with regulatory requirements. The mill has been closed during the last few weeks due to the sudden exit from the country of the overseas investors and HNB and another bank which have an exposure are actively negotiating with two investors - one local and another Indian, in order to recommence operations in the shortest possible time. In the balance sheet, Bank's total assets recorded a 12% growth from end 2002, and its loan portfolio showed a 11% increase. The same period also saw the bank's deposits showing a 14% growth. In the group accounts, subsidiaries of HNB posted very encouraging results. HNB Securities Ltd posted a Rs 442 million Profit After Tax, while the Bank's Insurance subsidiary, HNB Assurance Ltd, posted a Rs 21 million Profit After Tax. The period saw the Colombo bourse reaching unprecedented heights, and the banks stock broking subsidiary returning Rs 27 million in after tax profit. The offer of shares of HNB Assurance Ltd, which was concluded during early November 2003, was a phenomenal success with the issue being oversubscribed nearly 2.5 times. The improvement of the economic conditions in many of the sectors such as tourism and property development helped the Bank in its revival. The Sri Lankan economy posted substantial growth during the first half of the year raising optimism in achieving a 6% growth for the year. However, the political developments in the last few days is naturally a cause for grave concern to all of us. We genuinely hope that this situation will be resolved in the shortest possible time to prevent any medium term negative effects on the economy. The Bank has continuously effected reduction in its core lending rates and has in fact brought down the rate of interest on its advances to the rural sector to a single digit level, whilst SMEs and SMIs are being offered rates just above the double digit. HNB will continue to support the country's development, being an active partner, aligning our strategies to its resurgence and development Agenda. |
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