Pan Asia Bank 3Q profit surges on loans and higher margins

Pan Asia Banking Corporation PLC reported some robust profits in the three months to September (3Q21) on continued growth in loans, stretched margins and slight improvement seen in the reported asset quality. 

The bank reported a net interest income of Rs.2.30 billion for the July-September quarter, up 35 percent from the same period last year, solely on the decline in the interest expense, as interest income remained virtually unchanged from last year, with the cost of funds descending at a faster rate than the decline in interest yields of loans and other assets. 

This enabled the bank to expand its net interest margin to 4.81 percent, from 4.41 percent at the end of last year. 
However, the extension of debt moratorium for the pandemic-affected borrowers blunted the interest incomes during the period, the bank said in an earnings release. 

Pan Asia Bank continued the growth momentum in assets during the September quarter, as the bank expanded its loan book by nearly Rs.5.0 billion in the three months, bringing the total growth in the loan book to Rs.12.25 billion for the nine months, which translated into a little under 10 percent growth.

While the growth is below what the bank had expected at the beginning of the year, deceleration could be attributed to the virus resurgence, which led to the economy losing momentum from around April onwards and the bank becoming bit more cautious after the borrowers started confronting financial hardships again from the restrictions prevailed for months through the end of September. 

However, the bank improved its asset quality measured by the reported gross non-performing loans ratio, which eased to 6.06 percent, from 6.73 percent at the beginning of the year. 

The bank provided Rs.567.2 million for possible bad loans and other losses in the quarter, up 2 percent from the same period last year. 

Meanwhile, the loan growth enabled the bank to grow its fee incomes by 35 percent to Rs.450.9 million in the quarter.  

While the heightened foreign exchange volatility enabled the bank to make revaluation gains out of foreign currency during the period, the same volatility had a negative effect on the trading incomes, due to mark-to-market losses on foreign exchange contracts and currency swaps, the bank said. 

The bank reported a profit after tax of Rs.651.8 million or Rs.1.47 a share for the July-September period, compared to earnings of Rs.344.4 million or Rs.78 cents a share in the same period last year, translating into an 89 percent growth. 

For the six months to September, the bank made profit after tax of Rs.2.0 billion with earnings per share of Rs.4.54, compared to earnings of Rs.1.25 billion or Rs.2.83 a share in the comparable period last year. 
Billionaire investor Dhammika Perera directly controls a 29.99 percent stake in Pan Asia Bank.