Sampath Bank PLC has shown a strong financial performance in the first nine months of 2023, with a profit before tax (PBT) reaching Rs 22.0 billion and a profit after tax (PAT) at Rs 12.3 billion, despite facing several economic headwinds. The bank's success was highlighted by a significant rise in gross interest income, which increased by 44.6% to Rs 153.4 billion.
The bank's net fee and commission income (NFCI) also experienced a healthy increase of 10%. However, this was partially offset by a net other operating loss of Rs 2.3 billion, primarily due to an exchange loss from the Sri Lankan Rupee (LKR) appreciating against the US dollar (USD). Nonetheless, Sampath Bank managed to mitigate some of the impact through revaluation gains from forward exchange contracts.
While interest expenses grew faster than income due to interest rate hikes, reducing net interest income by a slight 0.3%, Sampath Bank's conservative provisioning strategy led to a decrease in impairment charges, which stood at Rs 14.4 billion. This included a marked reduction in the impairment on Individually Significant Loan (ISL) customers.
Operating expenses of the bank rose by 18.8%, influenced by factors such as an annual salary increase and inflation-induced price hikes. Government taxes contributed significantly to this rise, with an increase of a whopping 197.7%. Additionally, the total effective tax rate for Sampath Bank increased to 57.1% from 43.4% reported in the corresponding period in 2022, impacted by higher taxes and the introduction of the Social Security Contribution Levy (SSCL).
On the balance sheet side, Sampath Bank's capital adequacy ratios saw improvement across the board with Common Equity Tier 1 (CET 1), Tier 1, and total capital ratios at 14.37% and 17.73%, respectively. This was partly due to an infusion of Tier 2 capital and a decline in risk-weighted assets.
The bank's asset base expanded by Rs 161 billion, largely attributed to investments in Government Securities and initiatives like the Domestic Debt Optimisation Program (DDO). Total assets grew from Rs.1.32 trillion as at December 31, 2022 to Rs.1.49 trillion as at September 30, 2023, marking an annualised growth of 16.3%. Despite a decrease in total loans by Rs 55 billion and LKR appreciation against USD, Sampath Bank increased its total deposit book by Rs 112 billion - reaching Rs.996 billion as of September 30 - and saw an improvement in its Current Account Savings Account (CASA) ratio.
In recognition of its performance and resilience, Sampath Bank was named the “Best Bank in Sri Lanka for 2023” at the prestigious Euromoney Awards ceremony held in Hong Kong. This accolade underscores the bank's commitment to excellence and its ability to navigate through challenging market conditions while delivering substantial value to its stakeholders.
The Return on Average Shareholders’ Equity (after tax) increased to 12.49% as at September 30, while Return on Average Assets (before tax) stood at 2.15%, further highlighting the bank's robust financial performance.
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