Pan Asia Banking Corporation PLC has increased its profit after tax (PAT) by a staggering 197 percent to Rs.300.2 million for the quarter ended September 30, 2015 (3Q’15) from a year ago, supported by improved performance from all segments. The earnings per share (EPS) rose to Rs.4.04 from Rs.1.36 a year ago.

As a result, the bank’s PAT for the nine months ended September 30, 2015 has risen by 171 percent year-on-year (YoY) to Rs.751 million (EPS of Rs.3.40). This is the third consecutive quarter the bank has increased its after tax profits by over 100 percent YoY demonstrating the consistency in its performance. 
This has been possible due to above average growth in the bank’s loans and receivables while maintaining healthy margins and asset quality, continuous improvements in its cost structure and enhanced service quality.

The growth in the bank’s gross loans and receivables to customers has continued to bypass the industry average and during the nine months to September 2015 the portfolio grew by as much as 29 percent or Rs.18.4 billion. 

In effect, the bank’s growth in loans and advances book accounts for closer to 5 percent of the total private credit in the economy granted during this period.   
“This demonstrates that Pan Asia Bank plays a significant role in the overall economy and we will continue to play the role of a catalyst in meeting the financial needs of the aspirational Sri Lankans and enterprises whilst contributing to the overall economic development of the country,” said Pan Asia Bank Director and CEO Dimantha Seneviratne.


Outlier in RoE sphere
At a time when the banking sector return on equity (RoE) comes under pressure due to narrowing margins, Pan Asia Bank has continuously driven its return to its stockholders up to 19.77 percent by the end of 3Q 2015, virtually doubling the RoE from 9.81 percent in December 2014.


Stronger core-banking performance
The bank has made tremendous progress in its core-banking performance even under challenging conditions as the net interest income (NII) rose 72 percent and 55 percent, respectively to Rs.1.10 billion and 2.9 billion during 3Q 2015 and nine months. 

Amidst pressure on banking sector margins, Pan Asia Bank has widened its net interest margin to 4.48 percent from 3.82 percent in December 2014 due to prudent re-pricing and active assets and liability management.

In order to support its lending drive, the bank raised Rs.4 billion in debentures at very competitive rates, which was oversubscribed on the opening day itself, demonstrating the strong confidence placed on the bank’s current and future strategies. 


Continuous growth in non-fund-based income 
The non-fund-based income of the bank showed continuous growth as a result of the concerted effort towards diversifying the income sources. In addition to generating new relationships, there was increased contribution from trade finance and fee and commission income.

As a result, the net fee and commission income rose 26 percent and 33 percent, respectively to Rs.189.6 million and Rs.572.4 million during 3Q 2015 and the nine months to end-September. Other operating income and exchange income made a significant contribution, rising by 161 percent and 132 percent, respectively to Rs.217.7 million and Rs.484 million.

Overall, the bank’s total operating income i.e. NII and non-fund-based income increased by 65 percent and 50 percent, respectively to Rs.1.54 billion and Rs.4.21 billion during the same period.


Cost efficiencies at play
Despite the increase in operating costs in absolute terms, the bank continued to bring down its cost-to-income ratio to 52 percent from 61 percent in December 2014 by way of lean management practices, process automation and eliminating non-value adding activities in the processes.

The bank will embark on a business process re-engineering programme to further improve turnaround times and service aspects in processes.

The return on assets was doubled to 1.15 percent during the nine months, further demonstrating the effectiveness and the quality of the bank’s assets.

The bank continued to invest in staff development in order to develop its next generation of leaders and talent management. This was reflected in increase in personnel expenses by 19 percent and 22 percent, respectively to Rs.342.5 million and slightly over Rs.1 billion during 3Q 2015 and nine months. 

Having successfully migrated to a new core-banking system and treasury system during the 1Q 2015 and 2Q 2015, respectively with significant capital investments, the bank will further enhance the productivity of operations and the customer delivery touch points by focusing on building up the information technology and digital banking platforms .


Hundred billion asset base through quality portfolio
Pan Asia Bank recorded a significant milestone in reaching an asset base of Rs.103.1 billion by end-September 2015 keeping its promise to its stakeholders. 
In effect, the bank’s balance sheet has grown by 29 percent or Rs.23.5 billion during the nine months alone. In perspective, the bank’s assets have grown fivefold in just six years as the bank’s asset base by the end of FY 2009 was just under Rs.22 billion.

“This achievement wouldn’t have been possible if not for the support from all segments of the bank i.e. retail, SME, corporate and treasury and most importantly the unstinted commitment from all staff who went that extra mile to delight our customers,” Seneviratne stated.

Meanwhile, the deposit base of the bank grew by 19 percent or 12.5 billion to Rs.77.4 billion.

Further, in September 2015, the bank completed its refinancing green facility with the Global Climate Partnership Fund (GCPF) by taking the receipt of US $ 10 million (Rs.1.43 billion) refinancing, which strengthened the FCY funding of the balance sheet. 

Despite the higher precautionary provisions for possible loan losses, in a noteworthy move, the bank has further improved its asset quality as both its gross and net non-performing loan ratios declined to 5.36 percent and 3.64 percent, respectively from 5.73 percent and 3.78 percent in December 2014.
 
Capital adequacy levels – both Tier I and Total Capital ratios remained at 7.14 percent and 11.66 percent, respectively by the end of 3Q 2015, above the regulatory minimums of 5 percent and 10 percent, respectively.


Looking forward
Having crossed the Rs.100 billion asset base well in advance of the target date, the bank is now in the next league of players competing with the giants in the industry.

Hence, in the ensuing quarter, the bank will leverage on the positive macro-economic fundamentals, its growing franchise, state-of-the-art technology and its superior customer service at all levels to embark on a higher growth trajectory as the bank is now well poised to reach greater achievements.