HNB Group records Rs 16.2 Bn in profit after tax for 6 months

Hatton National Bank PLC posted a profit before tax of Rs 25.8 billion and a profit after tax of Rs 15.4 Bn during the six months ended June 2024.

The Group recorded a consolidated PBT and PAT of Rs 27.0 Bn and Rs 16.2 Bn, respectively.

Chairman Mr. Nihal Jayawardene commented on the performance: “Sri Lanka has come a long way since the devastating economic crisis and has taken steady steps toward stabilization.

“While uncertainties and challenges prevail, we reiterate our commitment to deliver sustainable growth for all our stakeholders”.

The Bank’s interest income recorded a YoY decline of 24.2% during the first six months, owing to the sharp drop in AWPLR by over 10 percentage points from 19.47% to 8.78% over the 12 months up to 30th June 2024, in line with CBSL’s expansionary monetary policy.

Interest expense declined at a similar pace, resulting in a 23.1% YoY drop in net interest income to Rs 45.6 Bn.

The bank’s fee and commission income grew by 5.5% YoY to Rs 8.6 Bn, primarily fueled by card and digital channel transactions.

While the foreign exchange transactions were encouraging, the marginal appreciation of the Sri Lankan rupee against the US dollar during the period resulted in the Bank recording an exchange loss of Rs 1.3 Bn for the six months.

Reducing interest rates and improving economic activity as well as the proactive actions taken by the Bank, facilitated rehabilitation of stressed borrowers.

While this led to an improvement in collections and recovery, impairment on account of investments in International Sovereign Bonds (ISBs), reduced significantly, as the Bank maintained its provision cover on ISBs since December 2023.

As a result, the total impairment charge was Rs 1.5 Bn for the 6 months ended June 2024. HNB’s asset quality remained above the industry levels, with a net stage 3 ratio of 4.09% and stage 3 provision cover at 56.1%.

HNB’s operating expenses rose by 12.1% YoY to Rs 19.8 Bn on staff and other related expenses. The Bank’s total effective tax rate remained largely unchanged at 53.4%.

Mr. Damith Pallewatte, Acting Chief Executive Officer of the Bank, said, “our performance during the first half underpins the concerted efforts on key areas.

“Despite narrowing margins, our focus on CASA has enabled us to partly cushion the impact.

“Commitment and meticulous efforts in supporting a business revival of our customers have yielded positive results. The demand for loans, which was subdued, indicated signs of recovery, especially in the second quarter.