Seylan Bank 1Q profits up; loan book contracts

Seylan Bank PLC reported strong top line and bottom line growth for the first quarter of 2023 (1Q23), though credit growth turned negative as a result of the impact coming from the appreciation of the rupee.
The sharply high interest rates and yields helped the bank to report a net interest income of Rs.11.48 billion, up 66 percent year-on-year.
The net fee and commission income rose 23 percent YoY to Rs.1.77 billion. 
Bank’s operating profit as at end March 31, 2023 stood at Rs.13.37 billion, up 47 percent YoY.
However, the operating level profits were somewhat diluted by the higher impairment charges during the quarter under review, which rose 88 percent YoY to Rs.6.35 billion.
“The bank increased the impairment provision to capture the impact on emerging global and local economic challenges and the credit risk profile of the customers and continuously assesses the credit quality of the bank’s loan portfolio in order to ensure adequate provisions are recognised in the financial statements,” Seylan Bank said in an earnings release. 
The bank’s personal expenses during the quarter under review rose 13 percent YoY to Rs.2.24 billion.” The Increase is mainly due to the salary revision as per the collective agreement and other adjustments made to compensate rising cost of living expenses.”
Seylan Bank reported earnings of Rs.1.66 per share or Rs.1.02 billion for the quarter under review compared to earnings of Rs.1.57 per share or Rs.966.89 million a year ago. The bank’s income tax expense during the quarter rose 43 percent YoY to Rs.646.87 million.
Meanwhile, as at end March 31, 2023, Seylan Bank had a loan book of Rs.423.9 billion, down 4.4 percent three months ago.
The deposits remained flat at Rs.549.8 billion, largely unchanged from Rs.547.3 billion three months ago.

With total assets over Rs.671 billion, Seylan Bank remained soundly capitalised as of 31 March 2023 with the key capital adequacy ratios above the regulatory minimum requirements and recorded 11.17 percent as Common Equity Tier 1 Capital Ratio & Total Tier 1 Capital Ratio and 13.92 percent as the Total Capital Ratio. LOLC Group holds 20 percent stake in Seylan Bank’s voting shares and 51 percent in non-voting shares.Sri Lanka Insurance- General Fund and Employees’ Provident Fund have 10 percent and 9.86 percent in Seylan Bank respectively.