Seylan Bank reports subdued December on margin compression

Seylan Bank PLC reported subdued financial performance in the final three months of last year, albeit seeing growth in its loans and fee incomes coming from cards and other lending activities, as the bank saw its margins narrowing amid a fast decline in both the yields and lending rates.
The bank reported a net interest income of Rs.9.60 billion in the October-December period in 2023, down 23.9 percent from the same period in 2022, as the decline in the interest income surpassed the decline in the
corresponding expense.
This was reflected in the bank’s net interest margin, which was coming in at 5.76 percent by the end of December 2023, from 6.33 percent at the start of
the year.

Seylan Bank too saw its loans growing relatively faster in the final three months or by Rs.29.4 billion, whereas the full-year growth came in at Rs.6.77 billion or at 1.4 percent, to end at a total portfolio of Rs.497.2 billion by the year end.
The bank’s impaired loans or Stage 3 ratio settled at 3.85 percent in 2023, improving from 4.98 percent at the start of the financial year.
Meanwhile, the bank saw its deposits rising by Rs.43.4 billion in 2023 to Rs.590.7 billion, logging a 7.9 percent growth for the year.
The bank’s quarterly earnings were Rs.3.00 a share or Rs.1.85 billion, down from Rs.3.38 a share or Rs.2.08 billion last year. For the full year, earnings were Rs.10.27 a share or Rs.6.32 billion, up from Rs.7.43 a share or Rs.4.57 billion in 2022. It set aside Rs.3.56 billion in the final quarter and Rs.17.0 billion for the year for possible bad loans and other losses, mainly from dollar bonds.
This marks a significant drop from Rs.7.59 billion and Rs.26.43 billion in the same periods last year. The net fee incomes, particularly from cards and loans, supported the bank’s bottom line, totalling Rs.2.09 billion for the quarter, a 7.5 percent increase. 
Although the trading income increased, a decline in foreign currency income caused the net other operating income to turn negative. Brown & Company PLC and LOLC Investments Limited jointly held a 23.24 percent stake in Seylan Bank.