Seylan Bank keeps up momentum

Despite a somewhat turbulent and challenging business environment, Seylan Bank recorded a strong half yearly performance with Profits after Tax reaching Rs. 1,755 million, for the six months ended 30 June 2016, against the Rs. 1,740 million reported during the corresponding period of 2015. 

This performance was aided by healthy growth in core banking activities despite the impact of mark-to-market losses due to an increase in interest rates.

Net Interest income increased from Rs. 5,835 million to Rs. 6,147 million, a 5.34% increase for the six months ended 30 June 2016 resulting from selective growth in advances and effective pricing strategy. The bank’s continuing focus on enhancing fee-based income saw it record a robust growth of 20.21% from Rs. 1,191 million to Rs. 1,432 million during 1H 2016.

Other operating income comprising net gains from trading, gains on financial instruments, gains on foreign exchange and other income decreased  by 40.97% from Rs. 1,035 million in 2015 to Rs. 611 million during 1H 2016 mainly as a result of mark- to-market losses on Government Securities due to the upward movement in interest rates. However, the volatility of exchange rates and the increase in foreign trade transactions aided the bank to record substantial growth of 16.21% in net exchange income.

As evident by the containment of growth in total expenses to 7.12% from Rs. 4,365 million to Rs. 4,676 million during 1H 2016, the bank maintained its focus on operating efficiency and cost containment. The bank reported a net credit growth of 7.57%, with net advances growing from Rs. 193 billion to Rs. 208 billion during 1H 2016.

During 1H 2016 the overall deposit base grew from Rs. 225 billion in December 2015 to Rs. 241 billion. The bank’s CASA ratio stood at 34.38% despite the general shift witnessed from low-cost deposits towards higher yielding fixed deposits during the six-month period.

The Gross NPA ratio (net of IIS), which stood at 4.63% as at the end of 1H 2016, has been on a continuous downward trend since 2009 due to the bank’s relentless efforts to achieve high credit quality and effectiveness in recoveries.

The bank’s core capital and total capital adequacy ratio remained strong at 10.93% and 11.33% respectively as at 30 June 2016, as against the statutory minimum. In July 2016, Fitch affirmed the bank’s rating at ‘A-lka’ with a ‘stable’ outlook.

On 5 July 2016, the bank opened the issuance of 30 million unsecured subordinate redeemable debentures to the public at an issue price of Rs. 100 with the option to issue a further 20 million debentures in the event of an oversubscription. It was oversubscribed on the same day and accordingly the allotment was made on 15 July 2016 which will boost its CAR further.

The bank continued its program for modernising and increasing its branch network throughout the country. During the period of six months, the bank has opened eight new branches. As at 30 June 2016, the bank network comprised 166 branches, 193 ATMs and 100 Student Saving Centers.

Overall, as a result of the performance during the six months, the bank’s Earnings Per Share (EPS) stood at Rs. 5.09. The bank recorded a Return (profit before tax) on Average Asset (ROA) of 1.64% and Return on Equity (ROE) of 14.66%. The bank’s Net Asset Value per share as at 30 June 2016 was Rs. 70.49 (Group Rs. 74.01).

The bank also continued its CSR initiatives focusing on education and accelerated its libraries project for underprivileged schools. During the period of six months ended in 2016, 20 more school libraries were opened, taking the overall number of libraries opened under the project to 100 with plans to take this number to 250 in the medium term.