HNB Group posts Rs 1.13 b profit in Q1

HNB continued its growth momentum in the first quarter of 2011 with core banking activities contributing to strong results recorded for the period.

The Bank posted a pre-tax profit of Rs 1.7 billion up by 42 percent while the post tax profits increased to Rs 1.13 billion up by 74 percent over the corresponding period of 2010.

Commenting on the performance HNB Managing Director and CEO Rajendra Theagarajah said the credit growth witnessed since second half of 2010 continued in to 2011 driven by conducive business environment.

This resulted in a growth of Rs 12.8 billion in gross loans and advances over the first three months of the year to reach Rs 222.3 billion as at end of March 2011.

The growth in loan book was reflected in a 7 percent growth in interest income from loans and advances withstanding re-pricing of assets. Total deposits during the first quarter grew by Rs 8.7 billion to Rs 248.9 billion while maintaining the CASA at 51 percent. During the period, the Bank managed to reduce its interest expense by 9 percent over the last year backed by the low cost deposit base and the prevailing low interest rates. The above resulted in a growth of 10 percent in net interest income over the corresponding period of 2010.

Non-interest income also witnessed a 25 percent increase contributing to overall growth with foreign exchange income increasing by a commendable 51 percent despite relatively stable foreign exchange rates. While other income too improved by 19 percent mainly on account of commission income earned from trade related activities.

The operating income witnessed an increase of 13 percent over the corresponding period of 2010 mainly on account of the aggressive expansion drive of the Bank adding 20 customer centres to the network during the 12 months up to end March 2011.

The provisions on account of bad and doubtful debts decreased by Rs 128 million over the corresponding period of 2010.

The Group comprising the Insurance subsidiary, joint venture investment banking operation and property development arm largely contributed to the improved Group performance recording a 50 percent growth in pre-tax profits to Rs 1.83 billion and a 89 percent growth in post tax profits to Rs 1.24 billion.