HNB records Rs 6.9 bn PAT in Q1 2023

Following a turbulent year marred by the country facing its most profound economic crisis post-independence, Hatton National Bank PLC made a resilient start to 2023, posting a PBT of Rs 10.7 Bn, up 80% YoY, while PAT stood at Rs 6.9 Bn in the first quarter, growing 42% YoY. The Group made a consolidated PBT and PAT of Rs 11.3 Bn and Rs 7.3 Bn respectively.

Commenting on the first quarter performance, Aruni Goonetilleke, chairperson of Hatton National Bank PLC, stated that “Despite the country still reeling from last year’s economic, social and political disruptions, the Bank recorded a solid performance for the first three months of 2023, reflecting our steadfast focus, prudent decision making and agility in the face of changes. Although uncertainties prevail, the positive developments on the country’s macroeconomic front are encouraging, and I would like to reiterate our unwavering commitment to safeguarding the interest of our stakeholders and supporting the economic recovery.”

Relatively high interest rates compared to Q1 2022, facilitated the Bank to report a net interest income of Rs 31.6 Bn during 1Q 2023, reflecting an 87% YoY growth. With higher card volumes coupled with an increased adoption of our digital services, net fee and commission income grew by 31% YoY to Rs 4.2 Bn.

The positive sentiments brought on by the IMF programme and the improved foreign exchange liquidity, gave way to a part relaxation of foreign exchange controls. This led to the appreciation of the Sri Lankan Rupee by approx. 10% during the 3 months up to March 2023. This resulted in the Bank recording a net exchange loss of approximately Rs 2 Bn for the quarter due to revaluation losses.

Despite vulnerabilities in the operating income, the Bank was able to maintain one of the best asset quality positions in the industry, with the net stage III loan ratio at 3.8% and stage III provision cover at 55.5% as at end March 2023. Having made significant provisions on account of impairment in 2022, the Bank made a total impairment of Rs 11.4 Bn for the quarter. This consisted of impairment on loans and advances and other off-balance sheet exposures of Rs 6.7 Bn, and impairment of Rs 4.7 Bn on foreign currency denominated government securities.

Operating expenses increased by 26% in 1Q 2023, driven largely by the impact of the higher inflation compared to corresponding period of 2022. However, growth in income outperformed that of cost, translating to a cost-to-income ratio of 26% for the first quarter of 2023.

Jonathan Alles, Managing Director and Chief Executive Officer of Hatton National Bank PLC noted that, “Following an unprecedented year mired in challenges, with the banking sector wrestling with multiple headwinds, we are pleased to see HNB’s performance in the first quarter of 2023. Securing the IMF Extended Fund Facility will bring in the much-needed credibility to restore investor confidence, allowing Sri Lanka to gradually regain access to foreign capital markets. Moving forward, it is imperative that the debt restructuring framework is finalised, ensuring that the stability of the financial sector is safeguarded.”

(HNB)