Sampath Bank recorded a profit before Tax (PBT) of Rs 18.3 billion for the year ended December 31, 2018, up by 10.5% against Rs 16.6 billion earned in 2017 after making necessary adjustments as per the SLFRS 9 new accounting standard which required impairment provisioning to be shifted from the incurred credit loss method used previously to the more forward-looking “expected credit loss” method (ECL), which has attracted higher impairment provisions.
This is a significant achievement particularly given the challenging macroeconomic conditions that were seen right throughout the year. Profit after Tax (PAT) too registered a marginal growth of 0.3% from Rs 12.10 billion in 2017 to Rs 12.14 billion in 2018.
Meanwhile the Sampath Bank Group also posted strong results with Group PBT and PAT for the year ended December 31, 2018 reporting Rs 19.1 billlion and Rs 12.6 billion respectively, compared to Rs 17.5 billlion and Rs 12.7 billion reported for the previous year.
Although SLFRS 9 was effective from January 1, 2018, the Institute of Chartered Accountants of Sri Lanka issued a Statement of Alternative Treatment (SoAT), granting the option to continue the application of LKAS 39 for the preparation of the interim financial statements. As permitted by the above SoAT, the Bank’s quarterly financial statements for the first three quarters have been prepared based on LKAS 39. However quarterly financial statements for the fourth quarter have been prepared applying SLFRS 9 and hence the resultant additional provisions have been charged to the fourth quarter.
Net Interest Income (NII), which accounts for more than 70% of Sampath Bank’s total operating income touched Rs 38.1 Bn in the current year, compared to Rs 28.4 Bn reported for 2017. This growth of Rs 9.7 Bn (34.2%) was supported by growth in loans and advances coupled with timely re-pricing of the asset and the liability portfolios to overcome the pressure on net interest margins. Furthermore, the Bank was able to shed certain large, high cost deposits during the year thanks to approximately Rs 33 Bn worth of Tier I and Tier II capital raised during the last quarter of 2017 and in 2018, which in turn helped to improve the NII. Reduction of SRR from 7.5% to 6.0% with effect from 16th November 2018 also had a slight positive impact on NII. The Bank managed to improve its NIM from 3.91% in 2017 to 4.41% in 2018.
Sampath Bank’s Board of Directors has recommended a final dividend of Rs 16.25 per share to be paid for the financial year ended December 31, 2018. This will be paid by Rs 11.25 in the form of scrip dividend and the balance Rs 5.00 in the form of cash dividend subject to the approval of the shareholders at the Annual General Meeting to be held on 29th March 2019.
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