Hatton National Bank PLC posted a strong performance in the first half of 2015 with its profit after tax increasing by 27.5% YOY to Rs 4.3 Bn and total assets increasing by 19.0% YOY to Rs 635.2 Bn.
The improvement in profit after tax by 27.5% to Rs 4.3 Bn also enabled the bank to boost its ROA and ROE to 1.4% and 14% respectively from a ROA of 1.25% and ROE of 12.2% reported in Q1 2015.The HNB group also performed well in Q2 2015 with all subsidiaries, including the newly acquired HNB Grameen Micro Finance Ltd and Acuity Partners contributing strongly to post a growth in profit before tax of 23.1% to Rs 6.5 Bn and a post-tax profit growth of 18%. Total group assets increased by 20.8% YOY to Rs 661.3 Bn.
The Bank was able to grow its ‘Net Interest Income’ by 3.9% to Rs 12.9 Bn in a low interest environment driven by the growth in CASA deposits by 28.6% YOY. The impact on interest income from the decline in rates was mitigated largely by a 21.4% growth in the loan book YOY with interest income falling by 7.2% compared to the corresponding period last year.
Net income from ‘Fees and Commissions’ grew by 11.4% to Rs 2.7 Bn to compliment the growth in NII and was derived mainly from credit cards, remittances and trade finance. Trading, investment and Other Operating Income collectively declined by 22.6% largely due to an extraordinary income of approximately Rs 900 Mn being received in 2014 on account of sale of shares in VISA and Master. The decline was to an extent offset by dividend income and revaluation gains on foreign exchange positions resulting in ‘Other
Operating Income’ increasing by 96.6% to Rs 1.6 Bn.
Impairment costs decreased significantly by 47.3% from 2014 and was mainly on account of interest write off on pawning advances being only Rs 25 Mn as against Rs 1.7 Bn recorded in the corresponding period last year. However, individual impairment costs which constitute a component of the total impairment charge increased by Rs 328.5 during this year.
The Bank improved its NPA ratio to 3.24% at the end of Q2, compared to 4.06%in the corresponding period last year and 3.62% recorded in 1Q 2015. The Bank has reaped the benefits of cost optimization and process improvement initiatives implemented over the past 12 months with operating costs increasing by only 4.9%.