Pan Asia Bank’s December net profit up 19% to Rs.346mn

Pan Asia Banking Corporation PLC (PABC), a mid-sized bank, reported earnings of Rs.4.65 a share or Rs.346 million for the October-December quarter, up 19 percent year-on-year (YoY), the interim financial accounts showed.  
The net interest income stemming from core banking operations for the quarter expanded 19 percent YoY to Rs.1.24 billion.
The net fee and commission income rose 51 percent YoY to Rs.365.65 million. 
For the year ended December 31, 2016, the bank reported earnings of Rs.4.24 a share or Rs.1.25 billion, up 20 percent YoY.The bank attributed the performance to a combination of factors  including the timely repricing of assets and liabilities, recalibration of assets into more remunerative areas, better recoveries and asset quality, the relatively strong growth in loans and receivables and better management of costs in all areas of the banking business during the year. 
The bank’s loans and receivables growth moderated to 14 percent level during the year. The total gross loans and receivables book stood at Rs.98.5 billion as of 2016 end.Despite the slowdown in the growth in loans and advances, the bank managed to expand its asset base by 20.1 percent bringing the total asset base up just under Rs.130 billion. The gross non-performing loan ratio improved to 4.74 percent from 4.84 percent YoY and the net non-performing loan ratio too followed suit by declining to 2.95 percent from 3.26 percent.The bank managed to increase its deposit base by almost 18 percent to Rs. 91.46 billion.
“However, the cost of deposits went up significantly because of the high-cost medium-term deposits rose much faster while the low-cost, current and savings accounts (CASA) took a dip,” Pan Asia Bank said in an earnings release. 
The total operating expenses rose by 18.24 percent to Rs.3.52 billion during the year under review predominantly due to increase in staff-related expenses and other overhead expenses due to the impact of tax hikes and inflationary pressures. As a result, the cost-to-income ratio, the key efficiency matrix in the banking sector, slightly deteriorated to 56.03 percent.  The bank’s return on equity (ROE) stood at 19.97 percent, above the industry average of 17.3 percent. During the year, the Tier I capital adequacy ratio improved to 8.37 percent from 7.82 percent YoY due to the relatively slow asset growth compared to the strong internal capital generation during the period under review.
Meanwhile, the bank is also in the process of raising equity over Rs.2 billion via a rights issue, which will issue one new ordinary share for every two existing ordinary shares held.
However, the bank’s total capital adequacy weakened slightly to 11.40 percent from 12.30 percent YoY. 
Business magnate Dhammika Perera as the single largest shareholder holds 29.99 percent of Pan Asia Bank.