Sampath reports robust September profits on reversal of impairment provisions

Sampath Bank PLC reported some robust financial performance in the three months through September 2024 as it was able to reverse the provisions made for possible loan defaults as it grew more confident about their borrower’s debt serviceability while it also grew their loan book.

The bank reversed provisions of Rs.828.1 million in the quarter compared to Rs.7.29 billion a year ago when there was anxiety over the borrowers’ ability to service their loans and uncertainty over how much to be provided for what they had invested in the International Sovereign Bonds.

“This improvement is largely attributed to prudent provisioning measures implemented during the previous years, coupled with a resurgence in the economic activity that has enhanced customers’ repayment capabilities”, Sampath Bank said in their earnings release reflecting the change in conditions they are beginning to see.

The bank reported profits of Rs.6.16 a share or Rs.7.22 billion for the July – September quarter compared to Rs.4.34 or Rs.5.09 billion in the year earlier period.

The bank reported a 4.8 percent increase in its Net Interest Income (NII) to Rs.20.77 billion, becoming an outlier among the many banks which saw their NII coming down due to declining interest rates.

This is despite the net interest margin slipping to 5.01 percent from 5.16 percent at the start of the year.

The bank saw its gross loans had expanded by Rs.41.17 billion in the nine months, recording a growth of 4.7 percent, of which Rs.10.62 billion had come in the September quarter.

The bank’s Stage 3 loans ratio fell to 5.27 percent from 5.87 percent at the start of the year reflecting improving asset quality.

The bank meanwhile saw its net fee and commission income coming down by 13.6 percent to Rs.4.38 billion mainly due to the “lower commission rates on import transactions and the impact of LKR appreciation during the period. 

However, fees generated from other channels, including credit, electronic transactions, cards and operations-related activities recorded growth compared to the same period last year”, the bank said.

The bank also made a trading gain of Rs.2.13 billion from a loss of Rs.20.73 million a year ago. Net other operating income turned a negative Rs.1.84 billion from an income of Rs.3.11 billion a year ago.

The operating expenses too have risen by 24.9 percent to Rs.10.83 billion.

Investor Dhammika Perera has 14.95 percent stake via his investment firm Vallibel One PLC while the Employees Provident Fund has 9.97 percent stake being its fourth largest shareholder.