|Wednesday, 21 April 2004|
Pan Asia increases operating profit by 300%
Pan Asia Bank reported a 300% increase in operating profits over the previous year whilst fully complying with the regulatory requirement on provisioning. Commenting on the year's performance the Managing Director/CEO of the bank, R. Nadarajah said that year 2003 has been an eventful year for Pan Asia Bank and the encouraging results are the fruits of a multi-faceted change process. "We re-capitalised, re-strategised, re-structured and refocused our business direction", he said.
Primarily keeping with the Central Bank's guidelines we firstly called up the balance share subscription which increased the capital by Rs. 110 million. Further, the bank raised debenture capital of Rs. 250million in October 2003, which was oversubscribed on the opening day.
Secondly, we changed our business direction to focus more on retail banking, in order to broadbase our risk and also to improve our fee based income. Accordingly the organisation structure was changed and key positions in HR and IT were filled with experienced professionals.
The bank also opted for the Deputy CEO to lead the change process and continue the strategic direction of the Bank. Hence a Deputy CEO with the required core competencies and dynamism was brought on board in July 2003.
Other operational areas also have been streamlined and strengthened to deliver an efficient service to its valued customers. The delivery channels have been re-organised to realise the vision of the bank to become the most customer-preferred commercial bank.
With the bank achieving the capital adequacy requirement stipulated by the Banking Act and guidelines of the Central Bankthe Central Bank gave permission for the bank to open three more branches during the latter part of last year.
We have opened branches at strategic locations in Kotahena and Dehiwela during the latter part of November 2003 and another branch at Wattala in December 2003. These branches alone currently account for a deposit base exceeding Rs. 450 million.
The financial performance of the bank for the year 2003 has been very satisfactory with an asset growth of 27.9%. Although the year on year growth in advances is only 1.4%., the six months ending December 2003 has seen a careful growth of 13%, reflecting the bank's retail focus.
This has been also due to the concerted efforts taken by the bank towards recovery of delinquent advances and making adequate provisioning strictly in terms of the Central Bank guidelines. Consequently the bank's earning asset book has improved to 77% at the end of 2003 compared to 55% in December, 2002.
The deposits reflected a more aggressive growth of 16.43% through the year complemented by the branch expansion. The deposits which was at Rs. 4,165 million in December 2002 grew to Rs. 4,849 million in December 2003, which attributes to growing confidence and changing perceptions achieved through effective marketing and sales efforts.
Net interest income during the year has been Rs. 271 million compared to Rs. 240 million in 2002, recording an increase of 12.79%. The increase is partly due to recovery of interest which has been suspended in the previous years despite narrowing down of interest margins in the Banking industry.
The fee-based income of the bank has also increased by 21.12% in the year 2003 recording an income of Rs. 120.697 million. With a view to cleaning up the Balance Sheet in respect of all cumulative doubtful loans and advances, we have during the year made a total loan loss provisioning of Rs. 155,695 million which made the operating profit before provisioning of Rs. 60,349 million to a loss of Rs. 95,345 million.
The loss of 2003 was after providing for bad debt provisions carried forward from year 2002. " We have cleaned up our provisioning fully this year.
In this context the bottom line is significantly improved", Nadarajah said. the operating profit before loan loss provisioning of Rs. 60,349 million is almost threefold compared to the same in 2002 of Rs. 20,504 million, he said.
Produced by Lake House