HNB posts Rs 2.36 profit in first half

HNB PLC continued its sustainable growth momentum backed by solid core banking operations posting a 19 percent growth in pre-tax profit to Rs. 3.4 bn and a 29 percent growth in post tax profit to Rs 2.3 bn during the first half of 2011 amidst pressure on interest margins.

Chairperson Dr Ranee Jayamaha said that “with a 10 percent increase in total assets of the Bank, HNB profiled its systemic importance in the banking sector.

“The Bank’s loan book recorded an impressive growth of 19 percent to reach Rs 248.5 bn during the 6 months ended June 30, 2011, driven by growth from all segments; nevertheless due to the lower yields interest income grew by only 2 percent.

Despite the low interest rate regime, the Bank was successful in recording an 8 percent growth in total deposits during the period under consideration whilst maintaining the CASA (current and savings accounts) at 51 percent. Backed by the well established low cost deposit brands of the Bank, the interest expense on deposits decreased by 5 percent during the 6 months ended June 2011 compared to the corresponding period of the previous year.

Thus the Bank managed to record a 6 percent increase in net interest income. Non interest income increased by 8 percent during the period with foreign exchange income improving by 25 percent over the first six months of 2010. Further, as a result of the strategic focus on improving fee based income, the commission income improved significantly contributing to other income despite a negative growth in investment income on account of the bearish sentiment that prevailed in the local equity market.

The tier I capital adequacy ratio as at end June 2011 stood at 9.13 percent while the total capital adequacy ratio was at 10.30 percent without taking in to account the profits for the six months ended June 2011.

HNB Managing Director/CEO Rajendra Theagarajah said “with the capital augmentation plan in progress to support the increase in demand for credit, the position is expected to improve significantly by next quarter.

The Group performance improved during the period with pre-tax profit increasing to Rs. 3.7 Bn, by 22 percent and post tax profit increasing to Rs. 2.5 bn, by 34 percent.

HNB Assurance PLC the insurance subsidiary, Acuity Partners (Pvt) Ltd the joint venture investment banking arm and Sithma Development the property development company contributed towards the growth in group performance.

With a view to capturing the growth opportunities in Sri Lanka, HNB expanded its domestic reach by adding 12 customer centers since January 2011 increasing the network to 217 customer centres.