Amana Bank 2Q earnings up 79% amid solid top line performance

Amana Bank continued its upward performance trend by recording a 2023 mid-year profit before tax (PBT) of Rs.802.8 million, reflecting a substantial growth of 44 percent in comparison to

Rs.556.9 million booked a year back. 
Owing to its resilient performance, despite the challenging economic environment, the bank in 2Q alone achieved a year-on-year (YoY) PBT growth of 122 percent to reach Rs.379.4 million, from Rs.171.2 million. 
Despite accounting for higher taxes, the bank went on to achieve a half yearly profit after tax (PAT) of Rs.419.6 million, corresponding to a healthy growth of 16 percent, whereas in 2Q, the bank’s PAT grew by 79 percent, from Rs.111.3 million to Rs.198.9 million.

The bank maintained its robust top line performance thorough the first half of 2023, posting an 80 percent growth in financing income, from Rs.4.85 billion to reach Rs.8.75 billion, which was well supported by effective deployment of funds and timely repricing of advances and liabilities. 
As a result, the bank’s financing margin improved to 4.8 percent, from 3.6 percent, to end the first half with a net financing income of Rs.3.36 billion, reflecting a 68 percent YoY increase. 
The bank’s total operating income grew by a significant 66 percent to reach Rs.4.47 billion, with net fee and commission income and net trading income contributing Rs.474.4 million (66 percent YoY growth) and Rs.622.9 million (47 percent YoY growth), respectively. 

Despite accounting for a higher level of impairment to mitigate risks of those businesses vulnerable to economic shocks, which resulted in impairment charges increasing by 191 percent, the bank fared to grow its net operating income by 38 percent to reach Rs.3.04 billion, from Rs.2.19 billion posted in 1H 2022.
The bank posted a commendable growth of 57 percent in operating profit before VAT on Financial Services and Social Security Contribution Levy for 1H to reach Rs.1.23 billion, compared to Rs.0.78 billion achieved a year back. Total comprehensive income for the period stood at Rs.387.2 million, reflecting a healthy YoY growth of 38 percent.

Amidst tight liquidity conditions and competition for funds in the market, the bank continued to witness an increase in acceptance for its people-friendly banking model, resulting in customer deposits growing by a commendable 9 percent to close 1H 2023 with a portfolio of Rs.122.9 billion, maintaining a healthy CASA ratio of 42 percent, while customers advances closed at Rs.80.0 billion.  
Owing to timely customer engagement and effective portfolio management, the bank improved its Stage 3 impaired financing ratio to 2.2 percent, well below the market average. 
The bank’s total assets as at June 30, 2023, stood at Rs.142.0 billion while the bank’s total capital ratio stood at 15.4 percent, well above the minimum regulatory requirement of 12.5 percent.