Sampath Bank profit soars
Reports Rs 3.3 b post tax profits in 2010:
Sampath Bank continued with the current growth momentum in 2010 as
well, by posting all-round impressive results over the last year,
despite many challenges faced.
The Bank’s pre-tax profit which rose to Rs 4,501.7 million in 2010
reflected an increase of Rs 525.5 million or 13.2 percent over the
pre-tax profit of Rs 3,976.2 million for the year 2009.
The post tax profit of the Bank recorded a growth of 57.4 percent
over the last year, rising from Rs 2,098.3 million in 2009 to Rs 3,302.7
million in 2010.
A higher growth rate in post-tax profits than that in pre-tax
profits, was made possible due to the tax free income accrued during the
period, which included a capital gain of Rs 654.8 million, realized
through the sale of bonus-shares received from Lanka Bangla Finance Ltd,
a recovery against an impairment provision of Rs 1,331.4 million and an
increase of Rs 333.02 million in mark to market gains on the trading
portfolio of the Bank.
Consequently, the Bank’s tax charge for the period under review,
decreased by Rs 678.9 million, despite the increase of 13.2 percent in
Financial results of the Sampath Bank Group, which consists of the
Bank and four subsidiary companies, were even better.
Pre-tax profit of Rs 4,794.2 million of the Group for 2010 recorded a
growth of Rs 789.3 million or 19.7 percent, over the previous year’s
pre-tax profit of Rs 4,004.9 million, with Sampath Bank, contributing
bulk (93.9 percent) of the profit as the main entity of the Group.
The post tax profit of the Group amounted to Rs 3,519.9 million,
recording a growth of Rs 1,436.2 million or 68.9 percent, over the
post-tax profit of Rs 2,083.8 million for the last year.
Marked improvements in the performance of all four subsidiary
companies during the period under review facilitated to record a higher
profit growth rate at the group level.
Other income of the Bank, bulk of which is Commission, recoveries and
Fee-Based income, too recorded a growth of Rs 1,612.1 million or 38.0
percent in 2010 over 2009.
Bank head office
The only source of core-banking income, which recorded a negative
growth (35.7 percent) in 2010, was exchange income, largely due to the
revaluation loss of Rs 176.2 million, incurred in 2010 against the
FCBU’s retained profits, as against the revaluation profit of Rs 67
million recorded in 2009.
This was solely due to the appreciation of the Rupee against the US
Dollar, from Rs 114.47 as at 31.12.2009 to Rs 110.95 as at 31.12.2010.
The Specific Provision for Loan Losses of the Bank period for 2010
amounted Rs 1,764.8 million, as against Rs 324 million for the period of
The resultant increase of Rs 1,440.7 million in specific loan loss
provisions was mainly due to the Bank’s decision to make additional loan
loss provisions as a prudential measure against certain identified NPLs,
over and above the prevailing time-based provisioning requirements,
ignoring the collateral held.
This move also helped the Bank to increase its Provision Cover
(excluding the General Provisions) against the NPLs from 54.34 percent
as at 31.12.2009 to 88.89 percent as at 31.12.2010, and it is well above
the industry average of 59.5 percent.
In addition, an impairment provision of Rs 275.9 million was made on
account of the investment in the ordinary shares of Union Bank Colombo,
as instructed by CBSL, on the grounds that there has been no return from
the date of investment.