HNB Group recorded Rs 14.1 Bn in Profit Before Taxes (PBT) for the first six months of 2018, representing a 30.7% Year-on-Year (YoY) growth over the first half of 2017 while Group Profit After Taxes (PAT) rose 26.9% YoY to Rs 9.6 Bn. At a Bank level, HNB’s PAT improved by 20.6% YoY to Rs 8.6 Bn for the six months period to June2018.
The Bank’s interest income grew by 9.6% YoY, outpacing the 5.6% growth reported in interest expenses resulting in a 15.3% YoY increase in NII to Rs 22.0 Bn for the period under review.
Net Fee and Commission income continues to supplement core banking, contributing 15.9% of the Total Operating Income, increasing by 8.8% YoY to Rs 4.4 Bn largely driven by the growth in the Credit Card income and Trade Finance.
The banking industry is witnessing a sharp increase in NPAs with significant collection and debt recovery difficulties experienced across the country.
The continuous focus on operational excellence, process reengineering and digitalization efforts to improve productivity enabled the continuing improvement in the cost to income ratio to 37.7%, compared to 41.4% reported during 1H2017. The Bank’s PBT grew by 25.2% YoY to Rs 12.6 Bn during 1H 2018 as compared to the 1H 2017. The impact of the changes effected in the new Inland Revenue Act resulted in an increase of 36.7% in income tax for the period with the total effectivetax rate, including financial VAT and NBT increasing to 44.4% for the period.
The Bank’s asset base grew by 4.8% during the first six months of the year to cross the Rs One Trillion mark. A robust 8.9% growth in the loan book since December 2017 boosted net loans to Rs 695.7 Bn, while deposits grew by 5.7% to Rs 741.2 Bn. The Bank’s Tier I Capital Ratio and Total Capital Ratios remained strong at 12.48% and 15.22% respectively, well ahead of the required regulatory minimums of 8.875% and12.875%.
MD/CEO Jonathan Alles stated: “We are pleased with our performance during the first half of 2018 in what has been an extremely challenging environment and are humbled by the recognition as the highest ranked bank in Sri Lanka by the prestigious Banker Magazine’s Global Top 1,000 Banks rankings. The passion, commitment and dedication of our team and their relentless drive towards service excellence supported by the on-going automation efforts continues to remain the driving force underpinning our success.”
Alles added that: “as we move in to the second half of 2018, we are fully cognizant of the macro-economic challenges, slow-down in economic growth and market liquidity constraints.”
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