The local unit of the world’s leading credit rating agency Standard & Poor’s (S&P), Lanka Rating Agency (LRA) this week re-affirmed its rating on Pan Asia Banking Corporation PLC’s (PABC) long and short-term financial institution ratings at BBB+ and P2 respectively. 
The bank’s rating re-affirmation is mainly supported by its average asset quality, performance, capitalization and liquidity, LRA said releasing its rating review.  
For the Financial Year Ended (FYE) December 31, 2014 the bank increased its net profits by 265 percent to Rs.415.2 million on the back of a 34 percent loans and receivables growth– the highest among LCBs in 2014. 
Continuing the momentum, the bank posted a net profit of Rs. 177 million, recording an increase of 106 percent year-on-year (yoy) for the quarter ended March 31, 2015 (1Q’15) on the back of a further 10 percent growth in its loan book. 
As at the end of 1Q’15 the bank has a loan book of Rs.69.2 billion and an asset book of Rs.81 billion.  
Meanwhile for the FYE Dec-2014, the deposits have grown by 20.5 percent to Rs.65 billion and it accounted for 83.5 percent of the funding mix. Most notably the low cost fund base measured through the bank’s current and Savings Account (CASA) base has grown up to 31 percent from 19 percent a year ago.  
This growth has largely driven by the retail and small and medium enterprise segments but well supported by the growth in the corporate banking unit, particularly by increasing the fee based incomes in a concerted effort to diversify the bank’s income sources. Bank’s fee and commission income has grown by as much as 46 percent yoy to Rs.207.1 million during 1Q’15. 
The bank’s net interest income increased 30.8 percent in FY 2014 while the NIM increased to 3.8 percent from 3.4 percent a year ago. This is at a time when the market’s key interest rates were coming down and the banking sector NIMs were coming under pressure. 
By the end of 1Q’15 NIM has further risen to 4.3 percent.
“It is noted that, with shorter-term deposits re-pricing and the growth in CASA deposits; the reduction in the cost of deposits outweighed the reduction in loan yields leading to an increase in NIM,” LRA stated. 
A notable improvement has been made in the bank’s Return on Equity (RoE), where the RoE has increased up to 9.8 percent by FYE Dec-2014 from 2.9 percent at the beginning of the year. The ratio was further improved to 14.9 percent by end of 1Q’15 demonstrating the bank’s continuous commitment to enhance its shareholder returns. 
Meanwhile during the FY 2014 the bank has improved its asset quality as its gross Non-Performance Loan (NPL) ratio has declined to 5.73 percent from 8.01 percent at the beginning of the year. 
The bank’s liquidity profile as well as capital adequacy levels stood above the regulatory minimums. The statutory liquid asset ratio clocked in at 21.42 percent as at FYE Dec-2014 whereas the regulatory minimum is 20 percent.
Both Tier I and Tier II capital adequacy levels also stood at 8.97 percent and 14.19 percent respectively as at FYE Dec-2014, above the regulatory minimums of 5 percent and 10 percent each.  
“These capital ratios are deemed to be average in view of the bank’s planned credit expansion strategies,” LRA stated. 
The proposed debenture issue is also assigned with a rating of BBB+, in line with the bank’s long term ratings.   
In October 2014 Pan Asia Bank issued a 5-year subordinated debentures issue for Rs.3 billion with a rating of BBB which was oversubscribed on the opening day itself.