Sampath Bankfurther extended its growth momentum in the 2nd quarter of the year and recorded apost-tax profit of Rs 5.7 Bn for the six months ended 30th June 2017.This registered an impressive 35.1% YoY growth in comparison tothe Profit AfterTax (PAT) of Rs4.2Bnrecorded for the six months ended 30th June 2016.Profit BeforeTax (PBT) too grew by36.6% YoY and reached Rs 7.8 Bn by 30th June 2017.

The Sampath Group, which comprises of Sampath Bank and four fully owned subsidiary companies, alsoposteda growth of 36.8% and 35.0% at PBT and PAT levels respectively.

Fund Based Income (FBI)
Net Interest Income (NII), which is the main source of income representing almost 70% of the total operating income of the Bank, recorded an increase of Rs 3.0 Bn (29.0%) during the period under review. Accordingly, the Bank recordedRs 13.1Bn as NII for the 1st half of 2017, as against Rs 10.2Bn recorded for the corresponding period in 2016.

The above achievement was made possible due to the robust growth recorded in the Bank’s fund base, as indicated by 11% (annualized 22%) growth in deposits and 12%(annualized 24%) growth in advances.The timely re-pricing of asset and liability productsand other fundmanagement strategies adopted by the Bank too played a pivotal role in achieving the 29% growth in NII.

Non Fund Based Income (NFBI)
Net fee and commission income, which largely comprises of credit, trade, card and electronic channel related fees increased to Rs3.8Bnduring the period under review, as opposed to Rs 3.0Bn recorded during the corresponding period in 2016. This income source too has posted animpressiveYoY growth of 26.3% largely due tothe robust growth recorded in advances, expansion of credit card operations and the successful launching of innovative value additions through electronic channel offerings.

The Bank's other operating income, net trading income and gains from financial investmentstoo recorded anincrease of 43%during the period under review.Increase in realized exchange income anddividend income from financial assets have contributed to the saidincrease in other operating income. Consequently, other operating incomefor the 1st half of 2017 stood at Rs 2.0 Bn, as opposed to Rs1.4Bn reportedduring thecorresponding period in 2016.

Operating Expenses 
Operating expenses of the Bank which stood at Rs7.2Bnduring the 1st half of 2016, increased to Rs 7.9 Bn during the period under review, reflecting anYoY increase of 9.5%. This increase was mainly due to increase in personnel expenses triggered by annual salary increments.Other overhead expensestoo increased due to general price hikes andindirect tax increases. However, the Cost to Income ratio excluding VAT & NBT on financial services improved to 41.6% in the first half of the year from 49.3% reported in the same period in 2016. This recordsan improvement of770 basis points,which is a significant achievementparticularly in view ofSampath Bank having one of the youngest branch networks compared to its closest competitors.

Impairment Chargeson Loans and Receivables
Impairment charges amounting to Rs1.35Bn recorded forthe first half of2017 showed an increase of Rs 794 Mn over the comparative period’s charge of Rs 561 Mn. Impairment provision of already impaired individually significant customers was further increased during the firsthalf of 2017 after considering the current status of the recovery process. Consequently, impairment charge on account of individually significant loans increased by 39% during the period under review. On the other hand, collective impairment charge increased by Rs 545 Mnpredominantly due tothe growth in the loan portfolio. Marginal increase in NPA ratio from 1.61% in December 2016 to 1.77% in June 2017 too has contributed to the above increase in collective impairment. However, the Bank’s NPA is still the lowest among industry peers and stands well below its closest competitors. This provides an indication of the quality of the loan book and the unique and efficient recovery measures implemented by the Bank.

Business Growth
Sampath Bank’s total asset base surpassed Rs 700 Bn mark in 2017. Asset base grew by 10.1% (annualized 20.2%) during thefirst half of 2017 to reach Rs 725.3 Bn against Rs 658.5 Bn reported as at 31st December 2016.Gross loans andreceivables grew by 12% (annualized 24%) during the periodand moved up to Rs 524.6 Bn (up by Rs 56 Bn) as at 30th June 2017. Total deposit base too increased by Rs 57.7Bn, recording a growth of 11% (annualized 22%) during this period and stood at Rs 574.0 Bn as at the reporting date. However, the CASA ratio (36.3%) decreased slightly compared to 31stDecember 2016 (38.4%).

Performance Ratios 
ROE (after tax) marginally increased from 23.47% as at 31stDecember 2016 to 24.29% as at 30th June 2017. ROA (before tax) too has increasedto 2.27% from 2.14% as at 31st December 2016. The Basic Earnings PerShare for the firsthalf of 2017 has improved significantly and stood at Rs30.64as against Rs 22.68recorded during the corresponding period in the previous year. This was an impressive YoY growth of 35.1%. Statutory Liquid Asset Ratio (SLAR) as at 30th June 2017stood at 22.40% which is well above the mandatory requirement of 20%.

Capital Adequacy  
The Core Capital (Tier I) and Total Capital (Tier I + Tier II) Adequacy ratios which stood at 8.31% and 12.87% respectively as at 31st December 2016 have shown a marginal drop during the period, mainly due to increase in risk weighted assets triggered by growth in the advances portfolio. Decrease in capital due to payment of cash dividends for the year ended 31st December 2016 toocontributed to the drop in capital adequacy ratios of the Bank. Accordingly, Core Capital and Total Capital Adequacy ratios as at 30th June 2017 stood at 8.21% and 12.17% respectively. Despite the slight drop, both ratios were maintained well above the minimum regulatory requirement of 5% and 10% for Core Capital and Total Capital respectively.

Other Information
2017 is an important year for Sampath Bank, where the Bank celebrates its 30th anniversary. Since its establishment in 1987, the Bank has progressively developed in all spheres of its operations and today, is positioned as the 3rdlargest private sector commercial bank in Sri Lanka. The Bank is renowned for its innovative banking solutions and excellent customer service during the past three decades.

Once again, Sampath Bank was awarded the ‘Best Bank in Sri Lanka - 2017’, a recognition given to top performing financial institutions, by the prestigious Business Magazine "The Euromoney". The Bank hasnow been endowed with this prestigious title for four years; 2017, 2016, 2014 and 2013.