SDB records 167% increase in profit after tax | Sunday Observer

SDB records 167% increase in profit after tax

SANASA Development Bank PLC (SDB) closed the nine months as at September 30, 2017 with a pre-tax profit of Rs. 526 mn, up by 16% over the corresponding period in the previous year. The bank’s quarterly profit after tax (PAT) for 3Q 2017 reported a significant 167% increase against the 3Q2016. With these growth rates, SDB recorded a PAT of Rs. 331 mn, up by 35% on year-on-year (YoY) basis.

The net interest income (NII) increased by 24% on YoY basis. When compared to the 3Q 2016, the NII growth was 29% during 3Q 2017, which was driven by the growth in business volumes. The faster increase in deposit rates which mirrored market trends due to tight liquidity, resulted in interest expenses increasing by 41% whilst the corresponding increase in interest income marked a lower rate of 34%.

Impairment charges recorded a 53% increase mainly due to the increase in collective impairment under the retail, SME and leasing portfolios. The individual impairment charges which saw an increase in the same period in the previous year due to fall back in recovery targets on retail,while leasing portfolios have been fully arrested in 3Q 2017. The retail and SME loan book has shown an improvement in portfolio quality whilst leasing book impairment has remained at levels reported in the previous years.

The trend in impairment of pawning portfolio has also shown improvement during 2017 and it is expected to further improve the same in the coming months. When compared with December 2016, SDB’s gross NPL ratio was higher YTD by +0.10 bps and reported as 2.20% by the end of the quarter, and remains lower than the industry average of 4.5% for LSBs and 2.7% for LCBs.

The Chief Executive Officer of SDB, Nimal C. Hapuarachchi added, “Over the years, we have been able to support a large number of individuals, households and communities across the country, to empower themselves from the grassroots level to a sustainable level of growth in the medium and long term through responsible financing.”

Chairperson of SANASA Development Bank PLC, Mrs.M.S. Kiriwandeniya said, “The support received from our shareholders has been immense and I am pleased to see the faith shown by them at this crucial juncture in the bank’s progress.”

Total assets growth of the bank for 9MCY 17 is 20%, driven by loan book growth of 19%.

The loan book growth in 9MCY 17 has been largely driven by the SME and higher margin retail segments, which now account for roughly 23% and 70% of the loan book respectively.

In an effort to strengthen its capital base, the bank successfully concluded a private placement of ordinary shares at Rs.140 per share and a convertible debt instrument which is fully compliant with Basel - III requirements from Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V., a Dutch development bank commonly known as FMO, SBI-FMO Emerging Asia Financial Sector Fund and its long standing partner International Finance Corporation (IFC) to raise Rs.2.4 Bn. Under this, SDB has issued 10,438,143 new ordinary voting shares for these three institutions. Consequently SDB’s outstanding voting shares have increased to 54,778867 shares. With this fresh capital infusion the total capital base of the bank at the end of 3Q2017 was Rs. 7.1 bn.

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