Sampath Bank March profit up on lower impairments, new loans

Sampath Bank PLC reported higher bottom-line performance for the three months ended in March as the bank provided less provisions for possible bad loans as the economy improves while the net interest income too increased.
The bank reported a net interest income of Rs. 21.56 billion for the January – March quarter, up 14.7 percent from the same period last year.
This was possible from the decline in the interest expenses which outstripped the decline in the interest incomes as there was a delay in cutting lending rates compared to the deposit rates until the beginning of the first quarter of this year.

Sampath Bank gave new loans worth of Rs. 18.2 billion for the three months with a growth of 2 percent while the deposits grew by 5 percent or Rs.63.6 billion.The bank’s interest margin stretched a bit to 5.24 percent from 5.16 percent at the start of the year.The bank’s Stage 3 loans ratio or the loans more than 90 days overdue was reported at 5.53 percent, slightly easing from 5.87 percent at the end of last year.

The bank reported a profit after tax of Rs.3.79 billion or Rs.3.23 a share, up 26.0 percent from Rs. 3.01 billion or Rs.2.57 a share.
The profit was largely cushioned by the 35.4 percent drop in provisions made against possible bad loans to Rs.4.41 billion for the quarter.
Meanwhile profitability was somewhat blunted by the Rs.4.3 billion exchange loss incurred on account of the forward rate agreements due to the rupee appreciation.
The bank said it managed to mitigate the impact from the realized gains as opposed to a loss of Rs.4.5 billion incurred in the same period last year.

Despite the growth in loans, the banks net fee and commission income came in lower by 17.3 percent to Rs.4.59 billion due to low trade related activities.
“The decline was driven by several factors including lower commission rates for import-related transactions, decreased trade volumes and the appreciation of LKR against the USD. However, fees generated from credit, electronic channels, cards and remittance-related activities showed growth compared to the same period last year”, the bank said in an earnings release.
The bank’s share ended 80 Cents or 1.0 percent down at Rs.79.10 yesterday.