Sampath Bank posts Rs. 3.97Bn profit after tax (PAT) for first half of 2020

Sampath Bank posted a profit before tax (PBT) of Rs 5.32 Bn and a profit after tax (PAT) of Rs 3.97 Bn for the six months ended June 30, 2020. Despite the unique challenges that prevailed since mid-March 2020, the Bank was able to limit the decline in PBT and PAT to 8% and 3.2% respectively compared to the corresponding period in 2019.

The Bank made solid progress towards its targets set for 2020, which together with diversified product portfolio embedded with technological advancements and strong cost control measures helped the Bank to control the impact on profits. PBT and PAT of the Group also declined by 7.7% and 4.2% respectively for the six months ended 30th June 2020 and stood at Rs 5.48 Bn and Rs 3.99 Bn respectively.

Meanwhile, the Bank remained well-capitalized with a Tier 1 capital ratio of 13.30% and a total capital ratio of 16.77%.

The Bank’s Net Interest Income (NII) for the quarter ended June 30, 2020 was significantly affected by two factors – the reduction in policy rates in order to provide relief to the economy and the moratorium granted to customers. Consequently, the day one loss on account of the COVID – 19 moratorium was recorded against the interest income as per the modification method given in the Sri Lanka Accounting Standard – 9 (SLFRS – 9).

As the entire day one loss that arose due to the COVID – 19 moratorium has been recorded during the period under review, Sampath Bank does not have to incur any additional impact on interest income during the 2H of 2020.

Due to these reasons, the Bank’s Net Interest Income declined by 11.9% and stood at Rs 17.4 Bn for the 1st half of 2020 compared to the same period in 2019. While closely monitoring the factors affecting this reporting line, the Bank’s ALCO continued to take necessary action to manage the net interest income to the best possible level. Overall, interest income for the period decreased by Rs 5.0 Bn to Rs 46.2 Bn compared to Rs 51.2 Bn recorded in the corresponding period in 2019, denoting a decline of 9.8%. The total interest expenses stood at Rs 28.8 Bn in 1H 2020 compared to Rs 31.4 Bn recorded in the corresponding period of 2019, a reduction of 8.5%.

Consequently, the Net Interest Margin for 1H 2020 decreased to 3.57% compared to 4.46% reported in 2019.