Record growth in first nine months:

Sampath Bank Group posts Rs 4,670 m profit

Sampath Bank Group which consists of Sampath Bank and four subsidiary companies, continued its growth momentum in the First Nine Month period of 201l, posting impressive results in all key areas over the last year same period.

Chairman I W Senanayake

The consolidated pre-taxpProfit of Rs. 4,670 mn of the Group for the First Nine Months of 201l was a growth of Rs 1,458 mn or 45.4 %, over the previous year’s pre-tax profit of Rs 3,212 mn, with Sampath Bank contributing bulk (94 %) of the profit, as the main entity of the Group. The post - tax profit of the Group for the First Nine Months of 201l which amounted to Rs 3,285 mn, recorded a growth of Rs 1,119 mn or 51.7%, over the post-tax profit of Rs 2,166 mn for the same period last year.

The tax benefits received as a result of reduced Corporate tax rate (from 35.0% to 28.0%) helped to record this higher post -tax profit growth rate, than pre- tax profit growth rate in 2011.

The bank’s pre-tax profit of Rs 4,406 mn in the First Nine Months of 201l , reflected an increase of Rs 1,413 mn or 47.2% over the pre-tax profit of Rs 2,993 mn for the First Nine Months of 2010 . The post -tax profit of the Bank recorded a growth of 52.3 % over the same period of last year, rising from Rs 2,009 mn in 2010 to Rs 3,060 mn in 2011.

The above profit growth was achieved despite many challenges posed by external market forces and the expansion drive undertaken by the Bank. The mark to market losses in the First Nine Months of 201l, arising from the market price fluctuations on the equity and Treasury Bill investments held by the Bank in the trading portfolio amounted to Rs 203.8 mn, as against a net gain of Rs 520.1 mn from this source, in the corresponding period last year.

In addition, exchange gains arising from the foreign exchange transactions recorded a negative growth of Rs 29 Mn, dropping from Rs 521 Mn in the First Nine Months of 2010 to Rs 492 mn in the same period 2011, largely due to volatile market conditions and continuous appreciation of the Rupee against the US Dollar. The Rupee appreciated against the US Dollar by Rs 1.75 over the one year period, from Rs 111.95 as at 30.09.2010 to Rs 110.20 as at 30.09.2011.

Though the bank realized capital gains of Rs 413.8 mn by selling part of the scrip dividend shares received from Lanka Bangla Limited, it was a shortfall of Rs 246.9 mn, compared to Rs 660.7 mn realized in the First Nine Month of 2010 from the same source. However, the bank realized another capital gain of Rs 364.6. mn in 2011, by selling the Visa /Master shares held by the Bank, which had been received free, a few years ago. The expansion drive of the Bank, which entailed opening of 76 branches during the last two years and recruitment of over 768 staff to manage this expansion drive, coupled with the cost of annual wage increases given effect, caused an increase in the bank’s operating expenses which amounted to Rs 1,018.7 mn or 21.5%.

Nevertheless, the cost/net income ratio of the Bank remained unchanged at 59.15% in 2011 from 59.15% in the 2010.

This ratio is expected to undergo a natural drop, with these new branches raising business volumes in future. Total deposit and the total asset bases of the Bank grew by 25.5% and 28.8% respectively during the one year period ended 30.09.2011. The growth rates in the two areas in 2011 which amounted to 19.4% and 22.6% respectively too were impressive, going by the industry’s current growth rates.

In addition, the growth in customer advances has been phenomenal, with the advances volumes recording a significant growth of 38.3 % during the one year period ended 30.09.2011 and 26.3% in the nine month period ended September 2011.

Sampath Bank operates with a network of 199 branches and 248 Automated Teller Machines.

The opening of 40 new bank branches covering all part of the country during 2010 was a record in the banking history of Sri Lanka and this year upto now 28 new bank branches have been added, of which 10 branches were opened on a single day.

Plans are underway to continue with the accelerated branch expansion program in the 4Q 2011 as well.

The Bank’s requests to setup subsidiaries in, Merchant Bank and Life Insurance have been approved by the Central Bank of Sri Lanka.

University of Moratuwa Vice-Chancellor Prof Malik Ranasinghe, and Dhara Wijayatilake, a senior public officer who currently holds the position of Technology and Research Ministry Secretary were appointed to the Bank Director Board from August 30, 2011.

Top professional and experienced Banker Aravinda Perera, has been appointed as the new Managing Director of the Bank from January 01, 2012.