HNB shows resilience under stressed conditions | Sunday Observer

HNB shows resilience under stressed conditions

22 May, 2022
Chairperson Aruni Goonetilleke
Chairperson Aruni Goonetilleke

In the backdrop of turbulent market conditions, Hatton National Bank PLC (HNB) continued to demonstrate resilience, strength and stability, posting a profit before tax of Rs 5.9 bn and a profit after tax of Rs 4.8 bn for the first quarter of 2022 recording a YOY growth of 7% and 3%. At Group level PBT and PAT were at Rs 6.4 bn and Rs 5.4 bn, a media release from the company stated.

Chairperson of Hatton National Bank, Aruni Goonetilleke said, “As Sri Lanka goes through unprecedented times, HNB has again demonstrated resilience. At this critical time, I wish to reiterate our commitment to all our stakeholders. As a responsible domestic systemically important bank, ensuring safety, stability and sustainability is our prime focus.”

With the tightening of the monetary policy since August 2021, the AWPLR increased by nearly 400 bps over the 12 months up to March 2022. This enabled the Bank to record a 59% increase in NII during 1Q 2022 compared to the corresponding period of the previous year. The Net Fee income grew by 42% YoY to Rs 3.2  bn for the first quarter of 2022, driven mainly by improved cards transactions and trade income.

The significant devaluation of the rupee in March 2022, compared to the previous year, resulted in trading gains of approximately Rs 7.5 bn in 1Q 2022.

The Bank also booked an impairment of Rs 7.4 bn against the impact of the currency devaluation on foreign currency denominated loans and investments, which was set-off against the position revaluations.

The Bank’s net stage III loan ratio improved from 2.55% as at December 2021 to 2.41% as at end March 2022 while stage III provision cover increased to 59%, maintaining its position as one of the best in the industry in asset quality.

However, considering the significant volatility in macro-economic factors in 1Q 2022, the Bank recognised a higher impairment charge of Rs 13.4 bn.

This included an impairment of Rs 6.7 bn on account of investments in foreign currency denominated government securities, subsequent to the announcement made by the Central Bank of Sri Lanka in relation to suspending the repayment of external foreign currency debt obligations of the Government and the sovereign rating downgrade.