Sri Lanka’s fastest growing commercial bank, Pan Asia Banking Corporation PLC saw its post-tax profit for the year ended 31December2015 (FY’15) increasing by as much as 151% to surpass the key milestone of achieving a billion rupee profit.
The bank closed the year with a post tax profit of Rs.1.04 billion well supported by the above average growth in gross loans and advances, higher margins and improved efficiency.
The earnings per share has risen to Rs. 3.53 from Rs.1.41 a year ago.
Meanwhile for the quarter ended December 31, 2015 (4Q’15) the bank has increased its after tax profit by as much as 110% to Rs. 289.6 million.
The bank has grown its net loans and receivables by as much as 40% or Rs. 23.9 billion during the year to Rs.84.2 billion. This is by far the highest growth in net loans and advances recorded by a licensed commercial bank in 2015.
This is also above the economy’s private sector credit growth of 24% for the first 11 months.
Commenting on the results in 2015, the bank’s Director and Chief Executive Officer Dimantha Seneviratne said the bank was able to record this exceptional performance due to proactive decisions and effective execution of strategies capitalising on the opportunities in the macro-economy while managing the risks.
“This performance reflects the immense potential of Pan Asia Bank and our contribution to the economy where we have disbursed our funds in to all sectors and regions in the country. Our Retail, SME and Corporate segments reached out to all areas of the country uplifting many industries and living standards of the people whilst creating financial inclusion,” he added.
Outlier in RoE sphere
At a time when the banking sector Return on Equity (RoE) comes under pressure due to narrowing margins, Pan Asia Bank has continuously driven its return to its share holders up to 19.94% by the end of FY 2015, virtually doubling the RoE from 9.81% in December 2014. The bank’s RoE is now amongst the highest in the industry and beyond.
Stronger core-banking performance
The bank has made tremendous progress in its core-banking performance as its fourth quarter Net Interest Income (NII) has risen by 23% to Rs.1.04 billion and the entire year’s NII increased by 45% to Rs.3.96 billion..
Despite the pressure on banking sector margins, Pan Asia Bank has expanded its net interest margin to 4.34% from 3.82% in December 2014 due to prudent re-pricing and proactive assets and liability management.
In order to support its lending drive, the bank raised Rs.4 billion in debentures at very competitive rates which was oversubscribed on the opening day itself, demonstrating the strong confidence placed by investors on the bank’s current and future strategies.
Continuous growth in non-interest income
The non-interest income of the bank showed continuous growth as a result of the concerted effort towards diversifying the income sources. In addition to generating new relationships, there was increased contribution from trade finance and other fee and commission income.
As a result, the bank’s non-interest incomes rose by a strong 29.9% to Rs.1.67 billion during FY 2015.
Overall, the bank’s total operating income i.e. NII and non-interest income increased by 40% to Rs.5.63 billion during the financial year.
Cost efficiencies at play
Despite increase in operating costs in absolute terms, the bank continued to bring down its cost-to-income ratio to below 53% from 61% in December 2014 through introduction of lean management practices, process automation and eliminating non-value adding activities in the processes.
The Return on Assets was doubled to 1.14% during FY 2015, further demonstrating the effectiveness and the quality of the bank’s assets.
During the year the bank revised up the staff remuneration and welfare spending while continuing its investments in staff development in order to develop its next generation of leaders through talent management. This was reflected in increase in personnel expenses by 29% to Rs.1.4 billion during FY 2015.
Having successfully migrated to a new Core-banking system and Treasury system during the year with significant capital investments, the bank will further enhance the productivity of operations and the customer delivery touch points by focusing on building up the information technology and digital banking platforms.
Hundred billion asset base through quality portfolio
Pan Asia Bank recorded a significant milestone in surpassing an asset base of Rs.100 billion by end September 2015 keeping its promise to its stakeholders.
In effect, the bank’s balance sheet has grown by 35% or Rs.28.2 billion to end the year at Rs. 107.8 billion. In perspective, the bank’s assets have grown more than five folds in just 6 years as the bank’s asset base by the end of FY 2009 was just under Rs.22 billion.
Meanwhile the deposit base of the bank grew by 20% or 12.8 billion to Rs. 77.7 billion.
Further, in September 2015, the bank completed its re-financing green facility with the Global Climate Partnership Fund (GCPF) by taking the receipt of $ 10 million (Rs.1.43 billion) re-financing which strengthened the FCY funding of the balance sheet.
Despite the higher precautionary provisions for possible loan losses, in a noteworthy move, the bank managed to further improve its asset quality as both its gross and net non-performing loan ratios declined to 4.84% and 3.26% respectively from 5.73% and 3.78% in December 2014.
Capital adequacy levels – both Core Capital and Total Capital ratios remained at 7.82% and 12.30% respectively by the end of FY 2015, well above the regulatory minimums of 5% and 10% respectively.
Meanwhile the bank has been recognised as‘The Fastest Growing Bank In Sri Lanka’ for the second consecutive year by the London based Global Banking and Financial Review while its unique value added product ‘Budget Leasing’ was recognised as ‘The Most Innovative Banking Product’ in 2015.
Further, in recognition of the excellent progress made in all areas of banking business, Pan Asia Bank was recognised with a Merit Award at the National Business Excellence Awards – 2015 organised by the National Chamber of Commerce becoming the only private sector bank to clinch an award.
The bank also managed to win a‘Silver Award’ at the SLITAD 2015 Awards organised by the Sri Lanka Institute of Training and Development in recognition of the progress made in human resource development practices.
Armed with a renewed focus on customer centricity which was evident in the recently unveiled new tag line of “The Understanding Bank”, Pan Asia Bank has ambitious and optimistic growth plans for the future.