HNB records Rs.11.2bn PBT in 1Q

Hatton National Bank PLC (HNB) recorded a profit before tax (PBT) of Rs.9.8 billion during the first quarter of 2024, while the profit after tax (PAT) amounted to Rs.6.2 billion. At group level, PBT and PAT were at Rs.11.2 billion and Rs.7.4 billion, respectively. 
The substantial monetary policy loosening adopted by the Central Bank to revive the economy resulted in a drop in AWPLR by 50 percent, from 21.40 percent to 10.69 percent during the 12-month period up to March 2024. This caused the interest income to decline by 20 percent year-on-year (YoY) to Rs.60.2 billion. 
The interest expense declined at a slower pace of 13 percent YoY to Rs.38.2 billion, due to the lag effect in repricing deposits. The bank also provided sizable interest rebates to support the most vulnerable sectors of the economy. As a result, the net interest income declined by 30 percent YoY during 1Q 2024.

The bank’s total non-interest income for the quarter was Rs.2.0 billion, compared to Rs.2.5 billion in the corresponding period of 2023, largely due to the appreciation of the rupee during the quarter and reversion of trade tariffs to pre-crisis levels. 
HNB recognised an incremental impairment charge of Rs.1.4 billion during the quarter, compared to Rs.11.4 billion provided during the first quarter of last year. The bank’s net Stage 3 ratio stood at 4.02 percent and remains superior to the industry level. 
HNB’s total operating expenses increased to Rs.9.9 billion, from Rs.8.9 billion, as staff costs and other expenses increased. The total effective tax rate stood at 51 percent in 1Q 2023, resulting in a total tax of over Rs.6.5 billion for the quarter. 
The bank’s asset base stood at Rs.1.9 trillion as at the end of March 2024, with group assets at over Rs.2 trillion. The bank maintained its gross loans at over Rs.1 trillion, with deposits over Rs.1.5 trillion. LKR CASA base grew by 22 percent YoY, improving the CASA ratio to 31 percent as at the end of March 2024. 
HNB reported Tier I and total capital adequacy ratios of 14.45 percent and 18.05 percent against the minimum statutory requirements of 9.5 percent and 13.5 percent, respectively. 
Commenting on the performance, HNB Chairman Nihal Jayawardene stated, “We are pleased to note that the country is making strong and steady progress in its recovery path as reflected in macroeconomic indicators. I believe that the external debt restructuring programme would also be concluded soon, safeguarding the interest of the banking sector, enabling to bolster the country’s growth prospects.”