HNB records highest ever profit

Hatton National Bank (HNB) recorded post tax profit of Rs 3.22 Bn., an increase of 6.5% over last year’s Rs 3.02 Bn.

Managing Director HNB Rajendra Theagarajah said “We are delighted to be able to deliver such results especially against the backdrop of significant fluctuations in key macro economic variables such as interest rates, inflation and exchange rates which adversely affected the growth and profitability of the financial Industry and a global financial crisis since the great depression, which caused some of the world’s biggest financial institutions to either file for liquidation or to be bailed out on the verge of collapse.”

Total income showed a significant growth of 23.9% to reach Rs 37.17 Bn., in 2008 despite the economic challenges. Interest Income was the predominant contributor towards the Bank’s top line, which grew by 23.5% to Rs 32.43 Bn., this year.

Growth in interest income was mainly driven by the increase in yields as a result of the upward movement in domestic interest rates, whilst growth in interest earning assets during 2008 stood at 12.2%.

Interest expense too witnessed a significant growth during 2008, as liabilities were re-priced at higher rates and the deposit mix tilting toward high cost funds. The resultant Net Interest Income (NII) grew by 14.6% to Rs.12.68 Bn., this year.

Non interest income grew this year by 26.4% to Rs 4.73 Bn., resulting in the non interest income to net interest income ratio improving to 27% in 2008. Both commission income and exchange income witnessed a healthy growth of 13.6% and 4.7% respectively.

Income from dividends witnessed a significant growth of 330% to Rs. 538 Mn. main contributors being HNB Securities Ltd and HNB Stock Brokers (Pvt) Ltd, which made an exceptional dividend payment as a result of the restructuring that took place with the formation of the joint venture Acuity Partners (Pvt) Ltd, with DFCC Bank.