‘People’s Bank continues to demonstrate resilience despite extraordinarily limiting circumstances’

People’s Bank yesterday announced the results for its year ended December 31, 2022 with total consolidated gross revenues, total operating income, and pre-tax profit amounting to LKR 391.2 billion, LKR 130.0 billion, and LKR 26.7 billion, respectively (2021: LKR 236.8 billion, LKR 110.7 billion and LKR 37.2 billion).

Extracts of a People’s Bank press release: ‘Primarily reflecting an extraordinarily high interest rate environment that prevailed – consolidated interest income rose by 58.0% during the year under review to reach LKR 351.4 billion whilst interest expenses soared by 107.5% to LKR 260.4 billion, reflecting the faster pace repricing of term deposits relative to loans. As typically seen throughout the industry, most term deposits at People’s Bank are with maturities of 12 months or less. In addition, in view of preserving and protecting its most vulnerable customer segments – the Bank and Group shouldered much of the interest cost increases – either by delaying or deferring any re-pricing of their loans. These collectively saw Consolidated Net Interest Margins slip by 6.0% to LKR 91.0 billion (2021: LKR 96.9 billion).

‘The Group’s non-funded income accounted for 30.0% of its total operating income during 2022 (2021: 12.5%) aided by an 81.1% increase in consolidated net fees and the extraordinary impact arising from the rupee devaluation. Excluding any one-off increases in fees on a Bank standalone basis, growth was still strong at 26.1% ultimately showcasing the Bank’s ongoing effort to consistently and very systematically improve its non-funded income sources year-on-year, more so in a highly volatile interest rate environment.

‘Reflecting high inflationary pressures during the year under review which peaked at close to 70.0%, total consolidated operating expenses rose by a measured 16.8% to LKR 59.0 billion (2021: LKR 50.5 billion); reflecting prudent cost control and efficiency improvements as exercised at every instance so reasonably possible. This compares well with most peers. As a result, the Bank and Group were able to successfully maintain its cost-to-income ratios at close to 2021 levels despite many limiting circumstances.

‘Relating to customer delinquencies and credit costs, the Bank assessed all its customers’ stress levels, including more importantly its larger key segments, and staged them on a preemptive and prudent basis. To its benefit, the Bank’s exposure to foreign currency investments subject to external debt restructuring was amongst the lowest with an aggregate amortized cost of only US$ 51.4 million at December 31, 2022.

‘Total consolidated customers deposits grew by 13.0% to reach LKR 2,450.1 billion whilst consolidated net loans contracted by 3.8% to LKR 1,915.8 billion reflecting the Bank’s and Group’s diligent approach to credit growth more so in a contracting macro-economic context, amongst other factors. Total consolidated assets crossed LKR 3.0 trillion to reach LKR 3,133.1 billion expanding by 10.6% from the end 2021.

‘Commenting on the results, chairman, People’s Bank, Sujeewa Rajapakse, stated that: “From a macro-economic perspective, 2022 was the culmination of economic stresses and stress events over the last several years. It was a year that saw the country’s external reserve position falling to a level previously unseen, the rupee devalue by close to 80.0%, inflation soar to nearly 70.0%, policy rates increase in a manner unprecedented in view of curbing inflationary pressures and, all in all, resulting in the country’s credit rating fall to a historic low and the economy contract by close to 11.0% which is deepest seen since independence. 2022 was therefore not a year where the top-line or bottom line was the prime focus but safeguarding customer interests in their absolute time of need, strengthening liquidity and the overall risk management and the governance framework of the Institution for its long-term sustainability was and where improving efficiency and productivity at every instance possible was at the core of all conversations and decisions. All these considered, including the added burden shouldered as a responsible State Institution – we are pleased with our 2022 results both on a quantitative and, more importantly, a qualitative front.’