Amana Bank’s resilient performance continues

Managing Director/CEO Mohamed Azmeer

Amana Bank continued its growth momentum in profit amidst subdued economic conditions, and recorded a growth of 25% in mid-year Profit after Tax to reach Rs. 362.0 million in comparison to Rs. 289.3 million a year ago. Profit Before Tax stood at Rs. 556.9 million compared to Rs. 505.7 million posted in H1 2021, reflecting a healthy 10% YoY growth.

During the first six months which was marred by economic and political instability, the bank’s Financing Income grew by 35% to Rs. 4.85 billion. Owing to policy rate changes reflecting in higher cost of deposits, the bank’s Net Financing Income grew marginally to cross the Rs. 2 billion mark. Despite this, Total Operating Income recorded a 20% growth to reach Rs. 2.69 billion, which was supported by a significant growth in Net Fee and Commission Income as well as Net Trading Income. Net Operating Income grew by 11% to Rs. 2.19 billion, after prudentially providing for an increased level of impairment considering current and anticipated market conditions.

Despite headline inflation being in excess of 58% in June 2022, the bank contained the increase in its operating expenses to 12%. Following this, the bank recorded a 10% YoY growth in Operating Profit before VAT on Financial Services to reach Rs. 781.7 million. The bank’s aggregate tax contribution of Rs. 419.7 million for H1 2022 accounted for 54% of the bank’s Operating Profit before all taxes. 

Owing to consolidation of business activities and decline in private sector credit growth as a result of tight monetary and market liquidity conditions, the bank’s Customer Advances grew by 5% to close at Rs. 79.3 billion while Customer Deposits grew by 8% to close at Rs. 103.6 billion. Despite challenging market sentiments, the bank’s Impaired Financing and Advances (Stage 3) ratio continued to remain well below the industry average and stood at 2.5% at end H1 2022. The bank’s Total Assets during the six months grew by 14% to close at Rs. 139.3 billion. The bank’s Total Capital Ratio stood at a healthy 15.7% as at H1 2022 while its Tier 1 Capital Ratio stood at 13.4%, both well above the minimum regulatory requirement of 12.5% and 8.5% respectively.

Commenting on the bank’s mid-year performance Managing Director/CEO Mohamed Azmeer said, “Having achieved a very strong Q1 performance, owing to the economic and political challenges during the period, our focus was to remain resilient during Q2 by proactively and effectively responding to the environment. I am happy that we were able to maintain our resilient performance in Q2, despite the unprecedented challenges in the external environment. On behalf of the Board and Management of the bank, I am grateful to the commitment of our staff members in managing the numerous uncertainties and the continued confidence and trust placed on us by our customers. 

“Considering the macroeconomic challenges, the bank in line with CBSL guidelines, continued to extend moratorium concessions to affected individual and business customers during the last few months. I am also pleased to note that Amana Bank was entrusted with Sri Lanka’s largest dividend distribution recently, which speaks of the trust and confidence we have built in the market over the years supporting top corporates besides our strategy focused on SMEs. Thanks to our unique model of banking which is development focussed, we stand protected and unexposed to many of the elements which has created challenges to the entire banking industry. We remain confident and positive about the nation’s potential to bounce back from the challenges and stand ready to play an impactful role in enabling growth and enriching lives.”