Amana Bank PLC reported an improved financial performance for the fourth quarter ended in December 2017 (4Q17), as Sri Lanka’s first non-interest based Islamic bank stretched its financing margin while modestly expanding its asset base. 

The interim results filed with the Colombo Stock Exchange showed the bank reporting earnings of 13 cents a share on total profit of Rs.236 million for the 4Q17, recovering from a loss of Rs.61 million reported in the same quarter in 2016. 

The bank recorded notable improvement in the core-banking performance for the period as the net financing income rose by a stronger 51.5 percent year-on-year (YoY) to Rs.794.7 million for the quarter.

The term net financing income at Amana Bank refers to the net interest income in the general banking terms. 

The financing margin or the difference between the return of the bank’s assets and the cost of the deposits and other funds rose to 4.2 percent in 2017 from 3.6 percent a year ago, providing a much needed fillip to the bottom line performance.   

During the year, Amana Bank issued 1.25 billion new shares at Rs.3.80 to its existing shareholder, Islamic Corporation for the Development of the Private Sector (ICD), the fund manager of IB Growth Fund (Labuan) LLP – (IBGF) to raise Rs.4.75 billion.

This enabled the bank with an equity capital base of Rs.10.1 billion by the end of 2017, to surpass the minimum capital of Rs.10 billion required to be met by January 1, 2018.

However, the bank now braces for Rs.20 billion in core-capital, by the end of 2021, which requires the bank to double its existing capital within a matter of 4 years. 

The share sale, which took place under special approval from the Monetary Board, as one party crossed the single shareholder limit resulted in IB Growth Fund (Labuan) LLP holding 23.65 percent stake in Amana Bank by the year end.  

Meanwhile, for the year ended December 31, 2017, the bank reported earnings of 29 cents or Rs.502.8 million against an earnings of just 3 cents a share or Rs.40.6 million in total earnings in 2016. The net financing income for the year rose by 43 percent to Rs.2.75 billion. 

During the year the bank expanded its gross loans or financing and receivables to other customers by Rs.4.7 billion registering a modest growth of 12.1 percent. 

By the end of December, the bank had a total gross loan portfolio of Rs. 43.4 billion. 

Asset quality ended a tad weaker with gross non-performing loan ratio at 1.89 percent from 0.89 percent a year earlier. Meanwhile, the deposits rose by Rs.4.0 billion or 8.5 percent to Rs.50.9 billion. 

By the year end the bank had a total asset base of Rs.63.5 billion, up 17 percent during the year. Amana Bank currently operates with 742 staff and 28 branches.