Seylan Bank delivers robust 4Q amid strong loan growth

Seylan Bank PLC reported some robust performance for the three months ended on December 31, 2021 (2Q22), with almost all key indicators having improved amid satisfactory growth in loans and capital heft, which is going to get a further boost in the months to come. 

The bank reported a net interest income of Rs.6.6 billion for the three months under review, up 40.4 percent from the same period in 2020, as the interest income increased while the interest expense declined, expanding the margins. 

The net interest margin, the spread between what the bank pays for its deposits and other liabilities and the yield of its loans and other interest-generating assets, increased to 4.05 percent, from 3.63 percent during the year. 

The bank reported earnings of Rs.2.64 a share or Rs.1.41 billion for the October-December 2021 quarter, up 67.9 percent from earnings of Rs.1.57 a share or Rs.841.3 million in the year earlier period. 

The bank recommended the first and final dividend of Rs.3.00 a share on both voting and non-voting shares, to be paid in the form of scrip dividend. 

For the year ended on December 31, 2021, the bank reported earnings of Rs.8.71 a share or Rs.4.65 billion, compared to Rs.5.69 a share or Rs.3.04 billion in FY20, up 53.1 percent. 
The bank gave total loans of Rs.56.6 billion during the year, translating to a 13.8 percent growth, out of which Rs.16.6 billion was booked in the final three months, slightly easing from 18.5 billion in the previous quarter.

The rock bottom interest rates helped banks to deliver strong financial performance during the two years of the pandemic, which also enabled it to secure some record amount of capital, in both debt and equity in 2021, locking in lower cost funds for the medium term. 

Showing that the momentum hasn’t still faded, Seylan Bank this week announced the issuance of Rs.6.0 billion worth of debentures as part of its Rs.20 billion worth of debenture line-up for the year under its capital augmentation plan. 

Meanwhile, Seylan had made a provision of Rs.4.12 billion in the quarter for possible bad loans, compared to Rs.1.58 billion in the year earlier period. For the full year, the bank made provisions of Rs.10.4 billion, up 49 percent from what it provided for in 2020. 

However, the bank reported higher asset quality, as the gross non-performing loans ratio was reported at 5.94 percent by the year end, compared to 6.43 percent at the start of the year.
The government holds a 32.61 percent stake in Seylan Bank via Sri Lanka Insurance Corp., the Employees’ Provident Fund, Bank of Ceylon and the Employees’ Trust Fund. 
Billionaire businessman Dhammika Perera has a 9.49 percent stake in the bank, being its fourth largest shareholder, while Brown & Company PLC has a little over 14 percent stake in the bank. 
LOLC Holdings PLC owns 51.60 percent of the non-voting shares of the bank.