Amana Bank 2018 profit crosses Rs. 900 m mark with 22% growth

Amana Bank PLC, having paid its inaugural dividend payment in 2018,continued its profit momentum to end the year on a significant note, despite the challenging market environment. 

Profit Before Tax (PBT)recorded Rs. 902 million, reflecting a YoY growth of 22%. The PAT for the same period was up by 11% recording Rs. 556million, after having provided Rs. 346 million as Income tax. 

Chairman Osman Kassim

CEO Mohamed Azmeer

The bank was also recognised amongst Sri Lanka’s top 100 listed companies by LMD in 2018 while being the youngest listed entity to be on this ranking. 

Owing to the increase in acceptance and demand for the bank’s people-friendly banking model, the bank’s Financing Income recorded 24% YoY growth to reach Rs.6.88 billion from Rs. 5.54 billion, while Net Financing Income grew to Rs.3.36 billion from Rs.2.75 billion, reflecting a22% YoY growth. 

Through the increase in top-line income along with effective pricing strategies, the bank continued to maintain a healthy Financing Margin well above industry recording 4.4% compared to 4.2% in 2017. Complementing the strong momentum of growth in core banking, the bank’s Net Fee and Commission Income reported an impressive YoY growth of 26% to achieve Rs.297 million. 

The introduction of new accounting standard SLFRS 9 saw impairment charges on advances increase drastically across the banking industry as the computation moved away from Incurred Loss method to Expected Credit Loss method. Despite this increase, the bank was successful in achieving an impressive 25% YoY growth in Operating Profit before all Taxes to close the year with a cumulative value of Rs.1.32 billion.

Despite the challenging liquidity condition in the market, Amana Bank’s Customer Deposits grew significantly by 21% crossing the Rs. 60 billion mark to close at Rs. 61.7 billion, while a similar 23% growth was recorded in Customer Advances to end the year at Rs. 52.8 billion, reflecting a healthy utilisation of funds. As a result, the bank’s Total Assets closed at Rs. 77.3 billion, showcasing an increase of 22% for the year. 

Due to the challenging economic environment, nonperforming advances increased across the industry during 2018.Despite this backdrop, the bank’s Gross Nonperforming Advances and Net Nonperforming Advances continued to remain well below industry to stand at 2.82% and 0.87% respectively, as a result of the bank’s asset backed financing model, prudent credit risk management and proactive resource allocation towards effective collections.

Despite the bank’s share price closing at Rs. 3.10 billion in the backdrop of depressed share market conditions, the bank’s Net Asset Value per share increased to Rs. 4.65billion even after the dividend paid in July 2018, aided by the bank’s sustained growth in profitability. The bank continued to be well above the statutory capital requirements where Tier 1 Capital Ratio stood at 17.6% while Total Capital Ratio stood at 19.0%. 

Amana Bank Chairman Osman Kassim stated: “Amana Bank has maintained positive growth trajectories across all major financial indicators, surpassing industry growth rates in the areas of total assets, customer deposits, advances and profitability. I am thankful to all stakeholders for their continued reliance on our unique banking proposition.”

Sharing his views on the financial achievements, Amana Bank Chief Executive Officer Mohamed Azmeer said: “Despite the challenging market conditions due to both political and economic uncertainties, the bank has performed exceptionally well, ensuring that we remain aligned to the goals outlined in our five-year strategic plan. Our sustained growth is a result of our investments in people and processes to drive assets and revenues, whilst containing costs. I am thankful to our shareholders, customers and employees, who have been a pivotal force in our relatively short journey. Going forward, the focus will be on increasing our market share in retail and SME sectors by optimising our resources to enhance customer convenience and accessibility.”

Amana Bank is a stand-alone institution licensed by the Central Bank of Sri Lanka and listed on the Colombo Stock Exchange with Jeddah based IDB Group, being the principal shareholder having a 29.97% stake of the bank. The IDB Group is an ‘AAA’ rated multilateral development financial institution with an authorised capital base of over $ 150 billion which has a membership of 57 countries. Fitch Ratings, in June 2018, affirmed Amana Bank’s National Long Term Rating of BB(lka) while revising its outlook to Positive from Stable. Amana Bank does not have any subsidiaries, associates or affiliated institutions representing the bank.