HNB reports impressive half year results

Half year results released by Hatton National Bank show an impressive performance by the bank recording an income of Rs 17.6 billion, a growth of 30% compared to the corresponding period last year.

This impressive growth is ample testimony for the resilience of the Bank to the less than conducive economic conditions prevailing in the country.

HNB’s net interest income grew steadily to Rs 6. bn., a growth of 13% during the first half of 2008 compared with 2007 and non interest income grew by 39% to Rs 2.3 bn from Rs 1.7 bn. This enabled the Bank to improve the Net Income from Rs 6.9 bn to Rs 8.3 bn., a growth of 20%. During the 1st half 2008 entire operating expenses bill was comfortably met by the net interest income from core banking activities.

Bank’s non interest expenses grew only by 6% to Rs 4.5 bn during the first half when compared to the same period in 2007. Personnel costs have been well managed with an increase of only 10% to Rs 1.7 bn when compared to the same period in 2007.

The premises, equipment and establishment expenses and other operating expenses too have been managed with only an increase of around 10% despite high inflationary conditions prevailed during the period.

HNB’s operating profit from ordinary activities before taxes surpassed Rs 3 bn mark, recording a growth of 49% over 2007.

Operating profit after tax for the period is Rs 1.6 bn up from Rs 964 mn., an improvement of impressive 63% compared to the respective period in 2007. Financial VAT and Corporate Taxes increased by 41% and 33% respectively, compared to the first half of 2007 to reach Rs 863 Mn and Rs 707 mn.

Taxation has and will continue to pose a challenge to the Banking industry to sustain growth in profitability. HNB’s total assets currently stands at Rs 239 bn indicating a 3% growth during the first half of 2008. Whilst Deposit and Loans and Advances portfolios grew by mere 1 %, investments in Government securities recorded a growth of 18%.

Prudent management of balance sheet growth with improved performance in the core banking activities and sound management of expenditure, resulted in an appreciable increase in post tax ROAA from 0.93% as at end June 2007 to 1.33% as at end June 2008.

HNB Group income too has increased by 26% to Rs 18.4 bn with post tax profits increasing by 28% to Rs 1.3 Bn. Group profits records a reduction compared to the bank, due to the inclusion of dividends of Rs 245 mn from Subsidiaries in the bank’s financials.