Seylan Bank records Rs. 1 b PAT in 2021 Q1 despite COVID challenges

Chairman Ravi Dias

Director/CEO Kapila Ariyaratne

Seylan Bank has made a steady start in 2021 by posting a profit-after-tax (PAT) of Rs. 1 billion in Q1 2021 amidst macro-economic challenges brought in by the COVID-19 pandemic. 

In a statement, Seylan Bank said interest income recorded a decline due to the lower interest rates and moderate book growth, but net interest margin showed a marginal increase over the corresponding period in 2020 due to lower financing costs.

Net Fee and Commission Income increased marginally to Rs. 1.2 billion from Rs. 1 billion, recording a year-on-year (YOY) growth of 17.41% due to enhanced trade and guarantee volumes compared to the previous year.

The Total Operating Income growth of 22.25%, predominantly driven by Net gains reported from de-recognition of financial assets which increased to Rs. 185.2 million from Rs. 69.6 million in 1Q 2020 and the other operating income, increased by Rs. 858.8 million, mainly due to increase in exchange income. On the flip side, trading activities reported a loss of Rs. 611.4 million mainly due to market loss on derivatives which contracted the operating income YOY growth.  

The bank recorded an impairment charge of Rs. 2.2 billion during the period under review against Rs. 1.1 billion reported in 1Q 2020 with a growth of 94.53% attributed to aggressive provisioning policy adopted.

Total Operating Expenses recorded Rs. 3.4 billion in 1Q 2021 compared to Rs. 3.3 billion in 1Q 2020. The bank continued to focus on widening the roll-out of lean initiatives and automation across the bank and rationalising expenditure on key controllable cost lines. 

Overall, the bank recorded a profit-before-tax (PBT) of Rs. 1.4 billion against Rs. 1.3 billion in 1Q 2020. Similarly, PAT was recorded as Rs. 1 billion against Rs. 0.9 billion reported in 1Q 2020. 

The bank achieved the Rs. 562.7 billion Total Assets as of 31 March 2021, resulting 0.90% growth compared to the 31 December 2020. 

Loans and advances portfolio of the bank recorded a marginal growth of 1.51% to Rs. 399.7 billion during the 1Q 2021 amidst of challenges faced. The growth in credit was driven primarily by Term Loans, and retail products such as leasing, pawning, etc.  

NPL ratio improved marginally to 6.39% against 6.43% reported as at last year end. The bank is continuously monitoring and strengthening the recovery process in order to bring under control and minimise the impact of the NPL. 

The overall deposit base recorded a marginal growth of 1.28% to Rs. 445.9 billion by 1Q 2021 compared to Rs. 440.3 billion. The bank’s CASA ratio (Current and Savings) stood at 34.52%. 

Seylan Bank remained soundly capitalised, with the key capital adequacy ratios well above the regulatory minimum requirements and recorded 11.02% as the bank’s Common Equity Tier 1 (CET 1) Capital Ratio/Total Tier 1 Capital Ratio and 13.59% as the Total Capital Ratio.

The bank maintained its liquidity position above the required minimum ratios, during the quarter under review. The Statutory Liquid Asset Ratio (SLAR) for the Domestic Banking Unit and the Foreign Banking Unit were maintained at 29.84% and 22.80% respectively as of end of first quarter 2021. 

The Return on Equity (ROE) stood at 8.20% for the period under review, compared to 6.43% recorded in 2020. The Return (before tax) on Average Assets (ROAA) recorded as 1.00% in 1Q 2021. 

Earnings per share (EPS) in 2021 stood at Rs. 1.88, a slight increase compared to the Rs. 1.69 recorded in the comparative year, while net assets value per ordinary share recorded at Rs. 91.92 (group Rs. 95.23). 

Successful and oversubscribed Debenture Issue of Rs. 6 billion endorsed and demonstrated the confidence placed in the bank by the investors.