Sampath Bank gears up for the future amidst economic challenges

Amidst economic headwinds, Sampath Bank showcased robust financial performance in the nine months ending on September 30, 2023. The bank reported a noteworthy upsurge in profit before tax (PBT) by 136.4%, reaching Rs 22.0 billion, while profit after tax (PAT) soared by 71.5% to Rs 12.3 billion compared to the subdued figures of the corresponding period in 2022.

Financial Performance Overview

The bank witnessed several key highlights:

A 10.0% year-on-year growth in net fee and commission income.

Notable growth in total LKR deposits, surging by Rs 112 billion to reach Rs 996 billion by September 2023.

Significant improvement in Tier 1 and Total Capital ratios, increasing to 14.37% and 17.73% respectively by September 2023.

Fund-Based and Non-Fund-Based Income

Sampath Bank experienced a surge in gross interest income, reaching Rs 153.4 billion, attributed to increased lending rates despite a marginal 0.3% reduction in net interest income due to higher interest expenses.

Non-fund-based income, specifically net fee and commission income, rose by 10.0%, driven by various activities such as card services, trade, and electronic channels.

Impairment Charges and Conservative Provisioning Policy

The bank adhered to a conservative provisioning policy, posting a total impairment charge of Rs 14.4 billion, marking a 70.4% decline from the previous year. Notably, impairment charges for loans and advances decreased by 66.9%, accompanied by an increased provision cover of 13.5% by September 2023.

Operating Expenses and Taxation

Operating expenses rose by 18.8% due to inflation-induced price increases, currency depreciation, and increased taxes. The total effective tax rate escalated to 57.1% owing to increased tax rates and the introduction of the Social Security Contribution Levy (SSCL).

Key Ratios and Capital Adequacy

Return on Average Shareholders’ Equity increased to 12.49%, while Return on Average Assets stood at 2.15% by September 2023. Additionally, capital adequacy ratios improved significantly, exceeding regulatory requirements.

Assets, Liabilities, and Awards

Total assets surged by Rs 161 billion, primarily due to investments in Government Securities. Loans decreased by Rs 55 billion, while deposits grew to Rs 1.21 trillion, showcasing an increase of Rs 110.1 billion.

Sampath Bank’s resilient performance earned it the prestigious title of “Best Bank in Sri Lanka for 2023” at the Euromoney Awards, acknowledging its exceptional performance amid challenging conditions.

In conclusion, Sampath Bank demonstrated resilience and growth in the face of economic challenges, maintaining robust financial performance, conservative provisioning, and commitment to excellence, earning prestigious recognition in the banking sector.