Pan Asia Bank posts Steady Performance in 1Q 2024

  • Net Interest Income for the quarter Rs. 2,884 Mn, up by 42%
  • Net Fee and Commission Income for the quarter Rs. 398 Mn, up by 17%
  • Operating Profit for the quarter Rs. 1,105 Mn, up by 43%
  • Profit before Tax for the quarter Rs. 796 Mn, up by 47%
  • Profit after Tax for the quarter Rs. 363 Mn, up by 12%
  • Gross Loans and Advances Rs. 146 Bn, grew by 5%.
  • Customer Deposit base reaches Rs. 180 Bn, grew by 3%.
  • CASA ratio improves to 20%.
  • Net Interest Margin – 4.91%, Return on Assets (Pre-tax) – 1.36%, Return on Equity – 6.42%
  • Stage 3 Loan Ratio stands at 4.10%.
  • The Bank remains well capitalised and liquid:- Tier 1 Capital Ratio 15.11% (Regulatory Minimum – 8.50%)
    – Total Capital Ratio 17.09% (Regulatory Minimum – 12.50%)
    – Rupee LCR 445.37%, All Currency LCR 354.62% (Regulatory Minimum – 100%) – Statutory Liquid Assets Ratio (SLAR) – 35.75% (Regulatory Minimum – 20%)

Pan Asia Banking Corporation PLC reported a steady performance reflecting improved macro-economic conditions as the Bank reported its financial performance during 1Q 2024, which showed judicious portfolio management and prudency exercised in dealing with possible fallout on its asset quality in challenging times. The Bank reported a Pre-tax Profit of Rs. 796 Mn for the quarter ended 31st March 2024, which is 47% increase compared to the corresponding quarter last year, supported by improved net interest income, net fee & commission income, and other operating income.

The Sri Lankan economy has experienced some positive signs of gradual economic recovery and a measure of stability in macro-economic factors compared to the corresponding quarter last year, with the appreciation of LKR against USD and the IMF bailout followed by the Domestic Debt Optimization (DDO) announcement.The models used regarding collective impairment in 2023 were continued in 1Q 2024 to ensure that adequate provision buffers were in place to absorb any potential credit risk that could arise in the future. The allowance for overlays applied in 2023 were continued and maintained during 1Q 2024 as well. Meanwhile, the Bank managed to end the quarter with healthy credit quality matrices due to improved credit underwriting standards and concerted collection & recovery efforts. The Bank also increased impairment provision buffers held on Stage 1 and 2 exposures further during 1Q 2024 to accommodate elevation in credit risks of affected borrowers/segments.

Since the latter part of 2023, market interest rates for both lending and deposit interest rates have gradually come down in line with the policy decisions of the by the Monetary Board of CBSL to reduce policy rates couple of times. Thus, the Bank’s the interest income of 1Q 2024 has decreased by 11% compared to corresponding period due to its response to the market conditions. Also, the interest expense of 1Q 2024 has decreased by 26% against the interest expense of 1Q 2023 due to low interest rates prevailed in 1Q 2024 despite the growth in deposit book. Consequently, the net interest income has increased by 42% in 1Q 2024 due to drop in interest expense at a faster rate than the drop in interest income.

The Bank’s net fee and commission income has increased by 17% during 1Q 2024 mainly due to the increase in fee income generated from loans and advances due to increased demand for credit which resulted from the prevailing low interest rate regime and other conducive macro-economic factors in the country.

The net gains from trading decreased by 35% during the reporting period due to the drop in capital gains from Sri Lanka Government Rupee Securities (T-Bills/Bonds) classified under FVPL.

The other operating income has increased significantly by 293% due to the prudently managed FX Positions with the appreciation of LKR against USD from Rs. 324 to Rs. 300 during 1Q 2024.

The increase in personnel expenses is mainly driven by increased staff salaries, bonuses, and allowances. The increase in other operating expenses contained to 8% due to the effective cost management strategies of the Bank and the cost increase is primarily due to effect of increase of VAT rates from 01st January 2024 onwards and general price increase of goods and services such as electricity and travelling expenses.

The taxes and levies on financial services and income tax expense have gone up mainly due to the increase in operating profits.

The Bank reported a Profit after Tax (PAT) of Rs. 363 Mn in 1Q 2024 which is a 12% increase compared to the corresponding quarter last year. The Bank reported an Earnings Per Share (EPS) of Rs. 0.82 for 1Q 2024.

The Bank reported a Net Interest Margin (NIM) of 4.91% for 1Q 2024. Meanwhile, the Bank reported a Return on Equity (ROE) of 6.42% and a Pre-Tax Return on Assets (ROA) of 1.36% for the quarter under review. Meanwhile, the Bank’s Net Asset Value Per Share as of 31st March 2024 stood at Rs. 51.63.

The Bank’s total assets experienced an increase of 2% mainly driven by the loans and advances, reverse repurchase agreements and financial assets at FVPL. The loans and advances book has increased by 5% during the quarter under review mainly due to the increase in SME and Corporate credit exposures. In the meantime, supported by the expansion in savings deposits the Bank’s total customer deposits base recorded a growth of 3% to reach Rs. 180 Bn as of 31st March 2024. As a result, the CASA ratio of the Bank has improved by 200 bps to 20% level.

The Bank’s Impaired (Stage 3) Loan Ratio stood at 4.10% and Stage 3 Provision Cover stood at 46.74% as of 31st March 2024. The Bank continued its focused actions towards managing the quality of its loan book by containing NPLs amidst the extremely weakened economic landscape.

The Bank maintains all its capital and liquidity ratios well above the regulatory minimum standards. The Bank’s Tier 1 Capital Ratio and Total Capital Ratio as of 31st March 2024 stood at 15.11% and 17.09% respectively. Further, the Bank’s Leverage Ratio stood at 7.65% as of 31st March 2024.

The Total Bank Level Statutory Liquid Assets Ratio (SLAR) as of 31st March 2024 stood at 35.75%. Meanwhile, the Bank’s Liquidity Coverage Ratio (LCR) under BASEL III stood well above the statutory minimums. The Bank maintained LCR of 354.62% and 445.37% in All Currencies and Rupees respectively.

Commenting on the Bank’s performance, Naleen Edirisinghe, Director and CEO of Pan Asia Bank said, “Our resounding performance for the 1Q 2024 demonstrates that we are well on track to meet our ambitious targets post economic crisis. A growth in PBT of nearly 50% for 1Q 2024 affirms the efficacy of our strategy which will be accelerated for generating greater earnings from core banking while

infusing operational efficiencies. Pan Asia Bank leveraged on its spirit of innovation backed by digital enhancements and can-do spirit as one team to deliver this encouraging performance which sets the stage for the coming year.

Pan Asia Bank rose 5 places in the Business Today’s Top 40 business organizations ranking for 2022- 2023 based on criteria such as portfolio, profits and risks taken, resilience, passion and how well challenges are met. The Bank was also selected by LMD as one of the ‘Most Awarded Entities’ and ‘Most Respected Entities in Sri Lanka’ in 2023. In addition, Pan Asia Bank was bestowed with gold and bronze awards at the Effie 2023 and a Black Dragon Award at the 2023 Dragons of Asia, International adverting Awards.

Recording consistent growth year after year, Pan Asia Bank is strongly positioned as the ‘Truly Sri Lankan Bank’, marking an illustrious journey that has promoted financial security and fulfilled the aspirations of its customers while supporting the prosperity of the nation.