Seylan Bank delivers robust 2Q on higher loans and margins – business news
Seylan Bank PLC delivered strong financial performance in the three months ending June as the bank ramped up lending despite some hibernation in the economy due to the resurgence of the virus while also benefiting from the slight improvement interest margins.
The bank, with assets of 575.4 billion rupees, reported net interest income of 5.51 billion rupees in the April-June quarter, registering a 17% increase from the same period in 2020, as the decline in interest charges outpaced the decline in interest income, a phenomenon observed across the industry, due to the revaluation of deposits at lower rates.
As a result, the bank benefited from net interest income of 4.12%, compared to 3.95% at the start of the year.
When the central bank cut interest rates since the pandemic began last year, lending rates fell to historically low levels faster than deposit rates, squeezing bank margins last year. But as deposits, which mostly consist of one-year maturities and lower terms in their maturity profile, began to revalue at lower rates, banks received an additional boost to their profits through the slight expansion of their interest margins.
In addition, Seylan Bank also increased its gross loans and advances portfolio by 13.5 billion rupees in the three months, bringing the total expansion of the loan portfolio to 21.5 billion rupees or 5.3% in the past. during the first six months.
The bank’s gross NPL ratio stood at 6.51% at the end of June, up slightly from 6.43% at the start of the year.
Meanwhile, the bank set aside Rs 1.84 billion in provisions against possible loan losses during the quarter, which is a 19% increase from the same period last year.
The bank also raised deposits worth 9.2 billion rupees over the three months, forming a total deposits of 14.8 billion rupees over the six months.
For the April-June quarter, Seylan Bank reported profit of Rs 2.13 per share or Rs 1.14 billion, up 70% from Rs 1.25 per share or 669.8 million rupees over the same period in 2020. For the six-month period ended June, the bank reported a profit of 3.94 rupees per share or 2.1 billion rupees, compared to 2.97 rupees per share or 1.59 billion rupees in the corresponding period of last year. Profits were also supported by the rebound in fee income, which rose 60% from the same period in 2020 to reach Rs 1.02 billion in the second quarter, when a large chunk of such income was removed to provide assistance to those affected by the pandemic. borrowers last year.
The government owns a 32.61% stake in Seylan Bank through Sri Lanka Insurance Corp., the Employees Provident Fund, the Bank of Ceylon and the Employees Trust Fund.
Billionaire businessman Dhammika Perera owns a 9.49% stake in the bank, being its fourth shareholder.