Hatton National Bank PLC (HNB) posted a profit before tax of Rs 26.3 bn and a profit after tax of Rs 16.6 bn during the nine months ended September 2023. The Group recorded a consolidated PBT and PAT of Rs 29.0 bn and Rs 18.8 bn, for the period.
The Bank’s interest income recorded a YoY growth of 63.5%, reaching Rs 220.7 bn during the first nine months, in the background of a sharp decline in interest rates during the third quarter. Interest expense increased at a faster pace of 115% YoY, resulting in a 17.1% YoY growth in net interest income which improved to Rs 83.2 bn. Bank’s net fee and commission income grew by 6.3% YoY to Rs 11.7 bn primarily fuelled by cards and digital channels.
The appreciation in the Sri Lankan rupee against the US dollar by approx. 12%, during the period resulted in the Bank having to record an exchange loss of Rs 2.5 for the nine months.
HNB continued to maintain its asset quality well above the industry, with net stage 3 ratio at 4.9% and stage III provision cover at 50.7%. The Bank recognised a total impairment charge of Rs 32.4 bn during the first nine months of 2023, which comprised of impairment on account of loans and advances and foreign currency denominated government securities.
HNB’s cost to income ratio stood at 28.5% for the nine months, despite, operating expenses increasing by 16.1% YoY to Rs 26.5 bn mainly driven by inflationary pressure.
The Bank’s total effective tax rate increased to 51.6% from 37.4% in the previous year, due to the increase in corporate tax rate from 24% to 30% and the introduction of social security contribution levy from October 2022. Bank’s asset base improved to Rs 1.86 tn as at end September 2023. Significant reduction in market lending rates in line with Central Bank’s relaxed monetary policy has enabled the Bank to record a Rs 34 bn growth in gross loans, to surpass Rs 1.0 tn in the third quarter. The Bank reached a significant milestone as its deposit base crossed the Rs 1.5 Trillion mark for the first time.
HNB recorded Tier I and Total Capital Adequacy Ratios of 11.91% and 14.73% against the minimum statutory requirements of 9.5% and 13.5%, with the provision to drawdown a further 250 bps from the Capital Conversation Buffer. The Bank has continued to maintain a strong liquidity position with a Statutory Liquid Asset Ratio and an all currency Liquidity Coverage Ratio, which are both well above regulatory minimum requirements of 20% and 100%.
