Sri Lanka Savings Bank PAT grows 74% to Rs.445mn

Sri Lanka Savings Bank said that it demonstrated resilience and agility in a challenging year amidst an unprecedented economic crisis by achieving a growth in profit after tax (PAT) of 74 percent to Rs.445.1 million for the year ended on December 31, 2022, compared to Rs.255.1 million recorded a year earlier.  Chairperson Keasila Jayawardena said “Amidst tremendous social and economic challenges, the bank has been able to sustain earnings  and has shown its financial agility and strength.”

She thanked the board of directors for the leadership and the staff of Sri Lanka Savings Bank and also the parent of Sri Lanka Savings Bank, National Savings Bank, for the support given to achieve these results.  Commenting on the results GM/CEO Sujith Fernando said, “Efficient utilisation of assets, prudent risk management and  effective command over costs have enabled the bank to achieve robust results amidst severe social and economic challenges, high inflation, overall contraction of the economy and restrictions placed on the bank, due to the proposed merger with its parent,  National Savings Bank.   The bank’s interest Income increased by 86 percent to Rs.1,119.7 million, as a result of the improved yields from investments and the loan portfolio. The bank was able to get the advantage of elevated interest rates and repriced  most of its treasury assets, which contributed a significant portion to the  interest income. The net interest income increased by 99 percent. The prudent management of interest earning assets and market risks led to an increase in the net interest margin by 7.66 percent to 14.98 percent. 

The bank’s return on assets after tax improved to 5.19 percent in 2022, from 2.84 percent in the year 2021. The return on equity after tax increased to 6.40 percent, from 3.83 percent a year ago. Amidst severe strain on businesses and SMEs, the bank took a prudent approach in impairing assets and due to this the impairment increased by Rs.149 million compared to year 2021.  

The bank’s operating expenses increased by 25 percent year on year to Rs.373.1 million amidst higher personnel expenses, depreciation of the rupee and overall price increases due to inflation. Compared to the year 2021, personnel expenses grew by 28 percent in 2022, mainly due to the increase in the cost of living allowance. Other expenses increased moderately only by 16 percent, due to stringent cost control measures. 

Due to the proposed merger with National Savings Bank, the Central Bank of Sri Lanka has placed restrictions on lending and deposit mobilisation on Sri Lanka Savings Bank since January 2021. Due to this reason, the bank has witnessed a degrowth in its portfolio and assets. However, this has enabled the bank to be highly liquid and to have higher capital adequacy ratios. 

The bank has been the pioneer in lending to microfinance institutions and giving technical assistance to them. However, now most of these microfinance institutions are self-sufficient in funding. The bank also granted moratoriums to all clients who requested them carrying out the social responsibility towards clients. If the proposed merger goes through, Sri Lanka Savings Bank will be absorbed by National Savings Bank.