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ECONOMYNEXT – Sri Lanka’s Hatton National Bank group has reported earnings of 4.3 billion rupees, down 29 percent from a year earlier, as the bank grew net interest income growth and made impairment provisions, in tight economic conditions, interim accounts show.
HNB group reported earnings of 8.05 rupees per share for the quarter. In the year to December 2022 the group reported earnings of 28.32 rupees per share.
Fee and commission income grew 38 percent to 4.4 billion rupees.
In the December quarter interest income grew 171 percent to 76.2 billion rupees in the quarter and interest expenses rose 236 percent to 42 billion rupees and the bank grew net interest income 119 percent to 34 billion rupees.
Sri Lanka’s interest rates rose sharply in 2022 after two years of money printing to suppress rates triggered a currency crisis and the country defaulted on its foreign debt. Banks in Sri Lanka have to make provisions for bad loans and also sovereign debt.
In the quarter HNB made provisions of 30 billion rupees, up from 7.7 billion rupees.
HNB said its stage 3 loans were kept at 3.4 percent and it was working on recovery efforts. For the year impairments were 31 billion rupees, up of 11.7 billion rupees.
“Concerted efforts on supporting our customers to revive their businesses and proactive recovery initiatives enabled the Bank to maintain its Stage III loan ratio at 3.4% as at end of 2022,” HNB said.
“Factoring in the economic stress the Bank proactively increased its credit related impairments by 168% to Rs 31.2Bn for the year compared to Rs 11.7Bn in 202
“Following the suspension of foreign debt HNB had made an impairment charge of 59 rupees on its investments in foreign currency denominated government securities taking the total impairments to 90 billion rupees.”
In the year assets grew 24.5 percent to 1.7 trillion rupees. The growth was partly due to rupee devaluation the bank said.
“‘..[E]xcluding this the growth was limited to 6 percent as the Bank adopted a cautious approach towards lending especially during the second half of the year,” HNB said.
HNB reported a Tier I Capital Adequacy Ratios of 11.06 percent and total capital adequacy of 14.0 percent, higher than the minimum requirement.
respectively against the minimum requirement of 9.5% and 13.5% respectively.
he Bank’s asset base expanded by 24.5% to Rs 1.7 Tn during the year, with loans and advances growing by 14.3% to Rs 1.1 Trillion. The growth was partly due to the devaluation of the rupee during the period and excluding this the growth was limited to 6% as the Bank adopted a cautious approach towards lending especially during the second half of the year.
