Seylan Bank recorded an impressive 1 H performance with a Profit after Tax of Rs 1.02 billion for the 6 months ended 30 June 2012. Profit before VAT & Income Tax rose to Rs 2.01 billion, as opposed to Rs 832 million (before the exceptional VRS costs), a 142% growth over the corresponding period last year.
The Bank’s strong performance was driven by growth in its Core Banking operations despite raising interest rates and controlled credit growth.
Net Interest income increased by 15% to Rs 4,276 million in 1H 2012, arising from selective growth in quality advances and effective management of margins. The Bank’s portfolio grew by 18% (annualised) in the 6-months of the year.
Non-interest income increased from Rs 1,171 million to Rs 1,237 million in the 6-months of 2012. The main contributor to this was the growth in foreign exchange income which increased by 20% over the corresponding period last year.
During the 6-months under review the bank focussed considerably on controlling its overhead costs. The efforts on improving cost efficiencies have resulted in the improvement of the cost to income ratio to 67%, a reduction of 6% from December’11.
The Bank grew it’s deposit base by Rs 10.3 Billion despite a fiercely competitive environment and due to sustained and effective recovery strategies was able to reduce the NPA ratio (net of IIS) from 14.2% to 12.3%
General Manager/CEO Kapila Ariyaratne stated “these results prove beyond doubt that the business expansion strategies backed by improvement in operational processes and focus on customer service & risk management are beginning to yield desired results, and now provides us an excellent platform to achieve sustained growth and improved profitability.”
During 1H 2012 the Bank opened 7 new branches/convenient centres and relocated 3 branches to more customer friendly locations. As at 30 June 2012, the bank network comprised of 138 branches/convenient centres and 139 ATM’s.
Preparing for future growth, the Bank has planned for a Debenture issue via a private placement for early October 2012. The bank intends to invest on identified key areas which are in line with the banks future growth strategies including new product development, branch expansion, service quality improvement, staff training & development and IT infrastructure.
Chairman of Seylan Bank Mohan Pieris PC stated “that we are focused on achieving our Strategic Plan which we formulated in the latter part of last year. We have also taken steps to improve our Capital & Governance Structure for future growth strategies that have been planned.”
As a result of the strong half-yearly profits posted, Earnings per share was at Rs 6.04 (annualised), while return (profit before tax) on assets and return of equity was at 1.90% and 11.50% respectively.