Sri Lankan state-owned People’s Bank recorded the highest profits in its 49 year history in 2010. The bank recorded Rs. 8.8 billion as profits before tax depicting a growth of 44 percent from 2009. Group profits before tax for the year reached Rs 11.4 billion, which is the highest in the banking sector for the FY 2010, the bank announced.
In the year, the gross interest income reduced by 9.3 percent, whilst interest expenses reduced by 20.2 percent. “This was mainly due to the considerable decrease in interest rates driven by Central Bank policy rates.
Notwithstanding, interest margins were sustained at healthy levels in the year under consideration, whilst the bank’s operational expenses were managed at prior year numbers. These factors among others are key reasons which underpinned this year’s commendable results,” People’s Bank said.
The above factors in concert enabled the bank to boost its rating during the year 2010, bettering its position to AA- (positive) from A (stable) by Fitch Rating Lanka, further augmented by AAA rating by RAM Ratings Lanka, reflecting the Bank’s strong fundamentals and sustainable business model and growth prospects
According to the annual report that profit after tax for the year improved by 56.8 percent to Rs.5.2 billion against Rs.3.3 billion in 2009. “This was subsequent to the mainstream tax charges of Rs 3.6 billion driven by salary related expenses and the high financial VAT liability.
The bank’s total assets witnessed a growth of 15 percent amounting to Rs 547 billion in comparison to Rs 476 billion in 2009, driven by favorable macro economic conditions that prevailed, and consist of a healthy mix of loans and advances and investments.
Total Loans and Advances swelled to Rs. 372 billion from Rs 299 billion, an increase of 24 percent over 2009 driven by increase in commercial and housing loans and pawning advances.
“The Pawning business has grown to become an integral part of the financing cycle for agriculture, fisheries and other Micro and SME sectors in the country. Currently, People’s Bank is the market leader in pawning and the most preferred and sought-after pawning service provider. This business yields good returns and is a major contributor to People’s Bank’s bottom line in addition to being very capital efficient,” the bank said.
Non-Performing Loans (NPL) fell by Rs 1.3 billion to Rs 18.7 billion in 2010. Consequently, the bank’s NPL ratio improved to 5 percent from the previous 6.7 percent, recording a reduction of 170 basis points. “This ratio is below the banking industry average.”
People’s Bank’s capital funds have improved to Rs 20.8 billion up from Rs.17.8 billion over the previous year. This was brought about by substantial retention of earnings, despite high taxation and returns to the bank’s owner, the Government of Sri Lanka (GOSL). It should be noted that People’s Bank’s contribution to GOSL by way of taxes and levies increased by 29 percent to reach Rs.9.9 billion compared to Rs. 7.9billion in 2009. “This amount is once again the highest contribution to State coffers from the banking industry.”
The cost income ratio declined to 60.2 percent from 60.6 percent in 2009 and return on assets of 1.4 percent in 2009 increased to 1.7 percent in 2010. Capital Adequacy Ratio in 2010 was managed well above the statutory requirement of Central Bank of Sri Lanka (CBSL).
The Bank’s customer accounts are now close to 13 million. We have the country’s largest branch network of 679 whilst 549 are online and interconnected. The Bank’s total branch outreach will be fully connected for online transactions before end June 2011.
The Bank has also invested extensively in its ATM network which has a total of 330, adding 30 new machines this year.
– Asian Tribune –