HNB Group posts PAT Rs 16.7b in 2017 | Sunday Observer

HNB Group posts PAT Rs 16.7b in 2017

 Rienzie Arseculeratne
Rienzie Arseculeratne

HNB successfully weathered the challenges that arose in 2017 while leveraging upon new growth opportunities to post a profit after tax (PAT) of Rs 16.5 billion reflecting growth of 16.4% Year-on-Year (YoY). Group PAT improved to Rs 16.7billion while the Group’s asset base crossed the Rs 1trillion milestone, during the year.

In 2017 HNB was recognized domestically and internationally for its outstanding performance and was crowned the ‘Best Bank in Sri Lanka’ by the coveted Banker Magazine UK.

CASA growth of Rs 23.4 billion during the year was a key achievement given the industry wide decline in CASA ratios as high interest rates attracted funds into fixed deposits. Nevertheless through concerted efforts HNB successfully maintained its CASA ratio while focusing on profitable business segments. As a result the Bank’s Net Interest Margins (NIM) increased from 4.80% in 2016 to 4.87% in 2017.

The bank’s Fee and Commission income grew by 18% YoY in 2017, strongly supported by rapid growth in digital payments and channels in addition to the growth in Trade Finance. During the period under review, the revenue from digital payment platforms and channels accounted for 30% of the total Net Fee & Commission income of the Bank. This included fees associated with cards, ATM and electronic banking transactions.

Net losses from trading doubled in 2017 to Rs 3.7 billion on account of higher swap costs. This loss was however offset by balance sheet translation gains, which together with foreign exchange income amounted to Rs 3.2 billion and reflected under ‘other operating income’. Further supported by an increase in dividends from group companies, other operating income grew by 58.3% YoY to Rs 5.2billion during 2017.

The NPA ratio increased marginally to 2.28% compared to 1.8% reported as at end of 2016, however it was an improvement from 2.64% reported as at third quarter of 2017.The impairment charge for 2017 also increased to Rs 3 billion from a very low base of Rs 237.2 million in 2016 which was a year where several large overdue loans were recovered.

HNB leads the industry with the lowest cost to income ratio among peers which improved further to 39.4% in 2017 from 42.5% in 2016 as the bank was able to reap the benefits of the extensive business process re-engineering, lean and digitization efforts undertaken over the past few years. The ratio has improved by more than 13 percentage points since 2012.

HNB’s profit before taxes and financial VAT was reported at Rs 27.1 billion amounting to growth of 10.5% YoY while total tax charge for the Bank and the group stood at Rs 10.6 billion and Rs 11.8 billion respectively. The Bank’s ROA remained at 1.8% while the ROE declined to 17.8% for 2017.

Meanwhile, HNB’s total assets grew by 11.2% YoY to Rs 954.9 billion while loans and advances grew by 9.4% YoY to Rs 639 billion.