HNB continued its growth momentum during the first quarter of 2017 with Group PAT growing by 16.4% yoy to surpass Rs 4 billion while Bank PAT grew by 18.1% yoy to be recorded at Rs 3.65 billion.
Growth in advances coupled with the rise in interest rates enabled interest income growth in excess of 45% yoy to Rs 22.6 billion. While interest expenses were also higher on account of funds moving into higher yielding deposits, the Bank’s substantial CASA base of Rs 228 billion cushioned the impact on interest costs partly. As a result, the Net Interest income grew by 25.9% to Rs 9.3 billion during the first quarter of 2017.
Net fee and commission income also performed well, supplementing core banking performance with a contribution of approximately Rs 2 billion which is a 15.9% growth from Q1 2016. Credit Cards, Trade Finance and Current Account services contributed strongly towards the growth.
The Bank’s asset quality remained strong with the NPA ratio being at 1.85% as at the end of the first quarter of 2017, compared to the industry average of 2.7%. The provision coverage of the Bank improved from 73.4% in Q1 2016 to 79.5% in March 2017.
Operational excellence initiatives continued to yield transformational benefits for the Bank which improved its cost to income ratio by 372 bps yoy to 41.9%.
Operating profits before VAT and Taxes grew by 22.1% yoy to Rs 6.35 billion. Charges for VAT and NBT increased by 52.5% as a direct result of the revision in the rate of VAT from 11% to 15%. Subsequently the Bank’s PBT grew by 16.5% to Rs 5.1 billion.
The Bank also reported efficient balance sheet growth, boosting its asset base by 18.7% yoy to surpass Rs 900 Bn in total assets.
The Bank’s deposit base increased by Rs 107.9 billion over the 12 month period to March 2017, to finance the Rs 101 billion growth in advances during the same period.
Commenting on the first quarter performance MD/CEO of HNB Jonathan Alles said that, “the first quarter of 2017 saw us further strengthening our presence in the digital space. Following the implementation of our payment and cash management and distributor financing solutions last year, we opened a few digital branches during 2017.”
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