Amana Bank reports solid pre-tax profits in March quarter

Amana Bank PLC reported robust financial performance in the three months to March 2023, navigating the adversities in the economy but the sharply higher taxes took the shine away at the bottomline. 
The bank operating on Islamic financing principles reported a net financing income of Rs.1.77 billion in the first three month of the year, up 57 percent from the same period in 2022. 

The bank benefited from the sharply higher interest rates, expanding its interest margins which largely offset the de-growth seen in its financing and receivables portfolio in the three months. 
The bank reported a net financing margin, an equivalent of interest margin in normal banking parlance, of 5.0 percent compared to 3.6 percent at the end of the last financial year. 
This, the bank said it was possible from the, “effective deployment of funds and timely re-pricing of advances 
and liabilities”. 

“Our 1Q performance reflects the bank’s stability and resilience amidst a challenging but gradually improving economic environment,” said the banks CEO, Mohamed Azmeer in an earnings release. 
The banks have reported some mixed financial performance in first quarter of 2023 as they gradually come out of the market gloom in 2022 and look for some growth in the back half of 2023 as the rates ease and the economy regains 
some footing. 
The big banks are set to report their first quarter financial report cards this week. The banking sector remains skittish over the likely effects from a possible bond restructuring as part of the debt optimization announced by the officials. 

Amana Bank reported earnings of Rs.220.7 million in the January – March 2023 quarter or 8 cents a share compared to earnings of Rs.250.7 million or 9 cents a share in the same period last year. 
The earnings were hit by the higher taxes which rose as high as 66 percent of its operating profit before all taxes as the aggregate tax contribution reached Rs.435.3 million.
The bank also brought in Rs.247.9 million in fee incomes, up 114 percent. 
The bank set aside Rs.723.7 million for possible bad loans and other financial asset losses, up 199 percent from a year ago. 

The bank’s financing and receivables portfolio slipped Rs.2.5 billion to 
Rs.84.6 billion.
The bank raised new deposits worth Rs.3.0 billion.
The bank’s impaired financing and advances ratio or the Stage 3 ratio which is somewhat equivalent to the gross NPL ratio was at 2.0 percent, compared to 2.1 percent at the end of last year. 
The bank’s capital adequacy ratios stand well above the regulatory minimums. 
The Jeddah-based IsDB Group being the principal shareholder held 29.97 percent stake in Amana Bank.