Pan Asia Banking Corporation PLC reported an after tax profit of Rs. 353.4 million for its January-March quarter (1Q’17) recording an increase of 16 percent from the same period last year.
The performance was largely supported by the significant increase in the fee and commission income, slightly lower tax liability and the closer tab kept on the costs.
The bank’s earnings per share was Rs. 3.41 by the end of the 1Q’17, slightly less than Rs. 3.91 reported in same period of 2016 due to the increase in bank’s equity resulted by the Rs.2.0 billion rights issue in March 2017 which was promptly oversubscribed.
Meanwhile the income tax expense for the period came down by 12% to little under Rs.160 million for the quarter from a year ago as a result of effective tax management.
What is also notable is the fact that despite the new equity injection, the bank was able to maintain its Return on Equity (RoE) at 18.95% which is among the highest in the industry, albeit slightly down from 19.97% reported three months ago.
RoE is the mostly watched performance indicator to gauge the attractiveness of the banking sector and Pan Asia Bank during its last three years has consistently remained an outlier in the industry.
In spite of the mounting pressure on banking sector margins as a whole, the bank was largely able to maintain its Net Interest Margin (NIM) at 3.79%, higher than the industry average of around 3.4% although slightly down from its December’s 3.87%.
The bank’s newly appointed Director/Chief Executive Officer, Nimal Tillekeratne said this performance was a true reflection of the bank’s and ability to report consistently higher financial performance even amid challenging conditions.
By the end of March 31, 2017, the bank had a core capital base of Rs. 8.7 billion and a total capital base of Rs.10.5 billion.
Net fee and commission income acted as an important anchor to guard against the tightened NIIs as such income grew by a strong 63 percent yoy to Rs.339.95 million.
Both loans and advances and deposits grew by little above Rs.2.0 billion to Rs.100.5 billion and Rs.93.8 billion respectively.
The Tier I and Tier II capital adequacy ratios received a boost from the recent rights issue proceeds of Rs.2.0 billion and by the end of March 31, 2017, the two ratios stood at 11.07% and 13.83% respectively, significantly up from 8.37% and 11.40% in December 2016.
With the strengthening of capital buffers the bank is now well positioned to expand its asset base much faster than before.
The asset quality came under slight pressure due to new additions to Non-Performing Loans (NPL) amid slow down in loans. Therefore, the gross NPL ratio rose to 5.63% from 4.74% in December.