HNB records Rs. 976 mn in post tax profits
The Hatton National Bank ended 2004 with a very
satisfactory performance by posting an after tax profit of Rs. 976 Mn.
This was a marginal decline of 3% compared to 2003.
The Bank's core income recorded a satisfactory increase
stemming from improvement in net interest, fee based and foreign
exchange income.
The total operational expenses were also contained with
a modest increase of 14% due to aggressive cost management. As expected
at the outset, profitability was considerably affected by large
provisions made on account of non-performing loans.
During the year, the Bank made total provisions
amounting to Rs. 1.57 Bn for bad and doubtful debts. Sustained efforts
to improve the bank's portfolio quality have begun to show visible
results. The Bank's NPA ratio improved to 9.7% in 2004 compared to
approximately 14% in 2003.
The NPA cover as at end 2004 also improved to 55% from
34% as at end 2003. During the year, the Bank raised approximately Rs.
1.4 Bn by way of a rights issue, which has contributed to maintaining a
capital adequacy ratio of 11.26% well above the statutory minimum of
10%.
It is envisaged that the Bank's core capital would be
further strengthened during the first half of 2005 by completing the
planned GDR issue which was approved by its shareholders last year.
While recognising that the unfortunate disaster of December 26, 2004 may
have a short-term impact on business, the Bank is focused on
implementing strategies designed to meet the core set of challenges
identified last year aimed at improving overall return on assets and
enhancing competitiveness.
These include balance sheet consolidation, further
improvement in asset quality, effective cost management, diversification
of income streams and achieving higher productivity. Chairman of Hatton
National Bank (HNB) Rienzie Wijetilleke said "during the year, the bank
continued to work on its medium term business plan, drawn in the
previous year.
The main factors of the plan were the restructuring and
reorganization of core functional areas, setting up of effective credit
delivery and credit monitoring facilities, further outsourcing of non
core activities, enhancing customer services and delivery channels and
the development of important ancillary functions to support core
activities (e.g. Economic Research and Business Development Units)" He
also said "the bank will continue to work on its business plan,
implementing strategies drawn up, monitoring results and re-formulating
strategies, where necessary.
The bank's capital structure will be further enhanced in
the New Year, with the inflow of the GDR proceeds during the first
quarter of 2005.
The bank will also continue to work on its balance sheet
consolidation process aimed at improving capital adequacy as well as the
ROA. The bank will continue to lay emphasis on risk management aimed at
further enhancing the asset quality", he said. |
