Seylan Bank records a Profit After Tax of LKR 1,135 Mn in 1Q 2023

Statement of Financial Performances

Net Interest Income (NII) of the Bank for the three months ended 31 March 2023 stood at LKR 11.4 Bn with an impressive growth of 67.98% in the period under review. Interest income increased by 116.87% amounting to LKR 28.9 Bn and Interest expenses increased by 167.62% amounting to LKR 17.5 Bn over the corresponding period in 2022.

Net Fee & Commission Income recorded a notable growth of 23.34% to LKR 1.8 Bn from LKR 1.4 Bn mainly due to increase in Loans & Advances related Fees, commission income on Debit & Credit Cards and Other Financial Services etc. which partly offset the reduction in certain trade related income, commission on guarantees etc.

The Bank’s total operating income recorded a notable growth of 47.26% amounting LKR 13.3 Bn during the period under review compared to LKR 9.1 Bn in the corresponding period of 2022, driven mainly by growth in Net Interest Income, Net Fee Income etc.

Total Operating Expenses recorded an increase of 23.39% from LKR 3.6 Bn in the 1Q of the previous year to LKR 4.4 Bn during the period under review. The Bank’s personnel expenses increased by 13.08 % to LKR 2.2 Bn in 1Q 2023 compared to LKR 1.98 Bn in 1Q 2022. The Increase is mainly due to the salary revision as per the collective agreement and other adjustments made to compensate rising cost of living expenses. Establishment expenses increased by 36% to LKR 2.2 Bn during the period under review. This growth was mainly due to the increase in prices of purchases and services as a result of higher inflation and local currency depreciation etc. compared to the corresponding period in 2022.

The Bank recorded an impairment charge of LKR 6.4 Bn in 1 Q 2023 against LKR 3.4 Bn reported in 1 Q 2022 with a growth of 88.14%. The Bank increased the impairment provision to capture the impact on emerging global and local economic challenges and the credit risk profile of the customers and continuously assesses the credit quality of the Bank’s loan portfolio in order to ensure adequate provisions are recognized in the financial statements

Income tax expenses stood at LKR 585.5 Mn which is a 41.68% increase from the comparative period, which stood at LKR 413.2 Mn due to increased tax rates.

Overall, Bank recorded a Profit Before Tax (PBT) of LKR 1.7 Bn in 1Q 2023, against LKR 1.5 Bn in 1Q 2022 demonstrating a growth of 17.26%. Similarly, Profit After Tax (PAT) was recorded as LKR

1.135 Bn in 1Q 2023 with a growth of 7.69% over the corresponding period in 2022.

Statement of Financial Position

The Bank’s total assets recorded at LKR 671 Bn as of 31 March 2023. Loans and Advances of the Bank recorded at LKR 424 Bn, a contraction mainly due to impact from local currency appreciation. Deposits reflected a marginal growth to LKR 550 Bn. The contraction of assets and liabilities was partly due to local currency appreciation.

Key financial ratios and indicators

Seylan Bank remained soundly capitalized as of 31 March 2023, with the key capital adequacy ratios above the regulatory minimum requirements and recorded 11.17% as Common Equity Tier 1 Capital Ratio & Total Tier 1 Capital Ratio and 13.92% as the Total Capital Ratio.

The Statutory Liquid Asset Ratio (SLAR) for the Overall Bank, Bank’s Domestic Banking Unit and the Bank’s Foreign Currency Banking Unit were maintained at 30.29%, 29.91% and 27.99% respectively as at 31 March 2023. The Bank also maintained the LCR above the statutory requirement. All Currency LCR Ratio and the Rupee LCR Ratio were maintained at 245.73% and 316.49% respectively.

The Return on Equity (ROE) stood at 8.24% and Return on Average Assets (profit before tax) stood at 1.02% for the period under review. The Net Interest Margin (NIM) recorded as 6.78% compared to 6.33% recorded in 2022. The Bank’s Earnings per Share stood at LKR 1.84 in 1Q 2023 compared to LKR 1.71 reported in 1Q of the previous year. The Bank’s Net Assets Value per Share stood at LKR 90.62 as at 31 March 2023 (Group LKR 93.29) compared to LKR 94.24 reported as at the previous year end (Group LKR 97.27).

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