HNB Group posts Rs. 5.1 b PAT, 1H 2019 | Sunday Observer

HNB Group posts Rs. 5.1 b PAT, 1H 2019

Hatton National Bank PLC (HNB) continued to demonstrate resilience, reporting a profit before tax of Rs. 8.3 bn and a profit after tax (PAT) of Rs. 4.8 bn for the first half of 2019. The group PAT for the period was Rs. 5.1 bn.

The Bank’s robust business model coupled with prudent asset and liability management, enabled HNB to post stable results from its core banking operations despite a slowdown in balance sheet growth. Net interest income (NII) for the first six months of 2019 grew by 17.9% YoY to Rs. 25.9 bn. Fee and Commission income which HNB derives from diverse sources complimented NII and at Rs. 4.4 bn accounted for nearly 15% of the total operating income of the Bank.

An appreciating rupee led to translation losses on foreign currency denominated long positions and FCBU earnings; this being the main reason for the Bank booking exchange losses of Rs. 577.2 mn during the first half. In comparison, a substantial exchange gain of Rs. 895.5 mn was reported for the corresponding period ending June 2018.

Chairman of HNB, Dinesh Weerakkody said, “The economy despite the many challenges appears to be recovering sooner than expected post 21/4. The CBSL had little choice but to effect lending and deposit rate cuts and has been fortunate that the US Fed did the same shortly after. Global investor appetite for Lankan sovereign debt appears to be intact, the outlook for equities has improved slightly and tourist arrivals are returning to normalcy.

Whether sentiment and indicators eventually translate to growth remains to be seen however, as uncertainty and relatively low business confidence have not abated completely.”

MD/CEO Jonathan Alles said, “Pressure on asset quality coincided with banks having to grapple with higher capital requirements imposed by BASEL III while also having to incur higher taxation on account of the imposition of Debt Repayment Levy, a position exacerbated by the unfortunate incident of April 21.”

Bank profit before taxes (PBT) were affected by the debt repayment levy of Rs 1.2 bn for the first half of 2019, which was not in existence in 1H 2018. PBT of the Bank was recorded at Rs 8.3 Bn while the PAT was recorded at Rs 4.8 bn.

PAT for the second quarter (Rs 2.8 bn) grew by 36.3% from the level achieved in 1Q 2019.