Seylan Bank 2Q profits halve amid higher provisions

Seylan Bank PLC saw its earnings plummeting for the quarter ended June 30, 2022 (2Q22) as the bank provided for possible bad loans heavily, though it made substantial gain through its core banking operations during the period.

The bank’s consolidated earnings for the quarter under watch was 85 cents or Rs.505.2 million compared to earnings of Rs.1.97 a share or Rs.1.15 billion reported in the corresponding period of the previous year.

The bank with an asset base of over Rs.666.4 billion reported a net interest income of Rs.10.1 billion for the quarter, up 84 percent year-on-year (YoY) as interest income rose 73 percent YoY to Rs.11.1 billion.

During the first half of 2022, the bank loaned little over Rs.25.7 billion, as its loan book grew 5.83 percent to Rs.467.7 billion during the six months. The bank’s deposit base grew by Rs.53 billion during the six months to Rs.531.7 billion. 

Seylan said its CASA ratio (current and savings) stood at 31.92 percent as at end June, 2022. 
Supported by its card operations and internet banking offerings, the bank recorded a net fee and commission income of Rs.1.3 billion for the quarter, up 31 percent YoY.

However, these top line gains were negated by over 300 percent jump in impairment charges to Rs.7.98 billion for the quarter under review. For the first half, the impairment charges rose 183 percent to Rs.11.3 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,” Seylan Bank said in an earnings note.  

The bank’s bad loan ratio was 4.36 percent as at June 30, 2022 compared to 3.64 percent six months ago.
Seylan Bank remains soundly capitalised, with key capital adequacy ratios well above the regulatory minimum requirements and recorded 10.18 percent as total Tier 1 capital ratio and 13.54  percent as the total capital ratio.