Hatton National Bank PLC (HNB) continued to demonstrate resilience, reporting a profit before tax of Rs 8.3 billion(Bn) and a profit after tax (PAT) of Rs 4.8 Bn for the first half of 2019. The group PAT for the period was Rs 5.1 Bn.
The Bank’s robust business model coupled with prudent asset and liability management, enabled HNB to post stable results from its core banking operations despite a slowdown in balance sheet growth. Net interest income (NII) for the first six months of 2019 grew by 17.9% YoY to Rs 25.9 Bn.
Fee and Commission income which HNB derives from diverse sources complimented NII and at Rs 4.4 Bn accounted for nearly 15% of the total operating income of the Bank.
An appreciating Rupee led to translation losses on foreign currency denominated long positions and FCBU earnings; this being the main reason for the Bank booking exchange losses of Rs 577.2 million (Mn) during the first half. In comparison, a substantial exchange gain of Rs 895.5 Mn was reported for the corresponding period ending June 2018. Chairman of HNB, Dinesh Weerakkody said, “The economy despite the many challenges appears to be recovering sooner than expected post 21/4. The CBSL had little choice but to effect lending and deposit rate cuts and has been fortunate that the US Fed did the same shortly after”.
Commenting on the Bank’s performance MD/CEO Jonathan Alles said, “over the past few quarters the banking sector has been experiencing the effects of multiple challenges. Sluggish GDP growth, high interest rates and stressed operating conditions within the agriculture and construction sectors have collectively served to impede collections for banks and led to surging NPA’s across the industry. Nevertheless, in this backdrop HNB has once again demonstrated resilience, proactively revisited our processes, setting up a dedicated vertical to specialize in underwriting; concurrent to other initiatives to entrench an outstanding credit and compliance culture”.
“We strongly believe that the situation would improve in the coming months, as we begin to witness signs of recovery as the Country moves forward.”
Bank PBT were affected by the debt repayment levy of Rs 1.2 Bn for the first half of 2019, which was not in existence in 1H 2018. PBT of the Bank was recorded at Rs 8.3 Bn while the PAT was recorded at Rs 4.8 Bn. PAT for the second quarter (Rs 2.8 Bn) grew by 36.3% from the level achieved in 1Q 2019.
All Group companies were similarly resilient in their second quarter performance and contributed to Group PBT of Rs 9 Bn. The Group PAT of Rs 5.1 Bn included the Q2 profit of Rs 3.1 Bn, an increase of 52% QoQ. Rs 7.8 Bn was paid as total Group taxes while at Bank level, total taxes of Rs 7.2 Bn was paid during the first half of 2019.
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