- Loan and receivables book surpasses Rs. 100 b
- Deposit base crosses Rs. 100 b mark
- Bank meets Rs. 10 b regulatory capital
- Asset quality continues to improve
Pan Asia Banking Corporation PLC said yesterday it has increased profit in 2017, demonstrating the resilience in operating in challenging market place where the margins came under pressure and the growth moderated.
The Annual Report for 2017 and the 4Q results released to the Colombo Stock Exchange showed the bank reporting a profit before tax of Rs. 1.88 billion for the year ended 31 December 2017.
The after tax profit grew by 11% to Rs. 1.39 billion. The earnings per share came down to Rs. 3.31 from Rs. 4.01 in 2016 due to the new shares issued via the rights issue. The return on equity also declined to 14.86% from 19.97% a year earlier due to the same reason.
The bank raised Rs. 2.06 billion in March 2017 via a rights issue to strengthen its capital base to both meet the regulatory capital as well as to fund the future asset growth.
Meanwhile for the quarter ended 31 December 2017 (4Q’17), the bank reported pre-tax and post-tax profits of Rs. 491.9 million and Rs. 472.4 million respectively, growing at a robust 23% and 37% each.
The rights issue funds coupled with the full year profits helped the bank to meet the regulatory minimum capital of Rs. 10 billion mandated for a licensed commercial bank by the Central Bank.
The bank’s loans and receivables book in 2017 grew by 13% translating in to a growth of 13%, slightly below the 14.7% growth in the private sector credit in the industry.
During 2017, the bank accomplished a key milestone in crossing a Rs. 100 billion advances portfolio to end the year with a gross loans and receivables book of Rs. 111.4 billion.
Meanwhile, deposits – the bank’s key funding source – grew by a robust Rs. 16 billion to close the year with a total deposit base of Rs. 107.2 billion. The bank’s four-month fixed deposit product became a key attraction in the market for those who sought a relatively higher yield in a short term investment product as it managed to offer a solution against the widespread uncertainty that prevailed with regard to the direction of rates in the market.
The bank also raised equivalent to Rs 1.1 b from a reputed development financial institution to grow the green lending channels in 2017 as well.
Meanwhile the bank’s Rupee Liquidity Coverage Ratio (LCR) reached a high of 208.84% in December 2017 while all currency LCR stood at 195.36%, well above the minimum requirement of 80% stipulated by the new BASEL III guidelines.
The net interest income grew by a moderate 2% to Rs. 4.7 billion as a result of faster rise in interest cost than the growth in interest income, whereas the bank’s net interest margin stood at 3.61% by end of 2017.
However, the net fee and commission income rose by a strong 18.65% during 2017 to Rs. 1.31 billion against Rs. 1.11 billion of the previous year mainly stemmed from the cards, trade and loan segments.
Meanwhile the bank made trading gains of Rs. 391.4 million in 2017 registering an increase of 42.28% primarily on account of increased net forward forex gains unit trust investments.
As a result of the robust credit underwriting and NPA management strategies, the asset quality improved as reflected in the gross non-performing loan ratio which came down to 4.36% in 2017 from 4.74% in 2016.
The bank’s capital adequacy ratios remain well above the BASEL III minimum requirements as both the Common Equity Tier I and Tier I ratio standing at 11.38% by the year end while the regulatory minimum is at 5.75% and 7.25% respectively. Meanwhile the Tier II capital ratio is at 13.53% against the regulatory minimum of 11.25%.
The bank’s Chief Executive Officer Nimal Tillekeratne said that the performance reflected the bank’s managed growth in advances due to certain conscious decisions taken with the objective of improving asset quality and other operational aspects. “Year 2017 has been a complete reset year for us as we did some crucial changes in to our management structure, risk management practices and processes to ensure that we have a stronger foundation in place to take off when we want to. Despite the temporary slowdown in our bottom-line and the portfolio performance in 2017, we reached certain important milestones during the year. Now that we have completed most of the intended reforms, we have already begun to see the results emerging in terms of accelerated growth in our portfolios,” Tillekeratne added.
In recognition of the continued expansion in the bank’s franchise, the bank was awarded as the Fastest Growing Commercial Bank in Sri Lanka for the fourth consecutive year in 2017.
Besides, the bank’s persistent efforts on pushing itself for boundaries, the National Chamber of Commerce recognised the Pan Asia Bank for its banking excellence for the third consecutive time at its benchmark business excellence competition, National Business Excellence Award 2017.
With the capital adequacy and liquidity remaining at convenient levels and structural reforms are well on their completion, Pan Asia Bank is now poised to ride the next wave of growth during 2018.