- Profit After Tax soars by 17% to reach Rs. 2 b
- Net Interest Income up by 11% despite absorbing loan modification losses in full
- Operating Profits up by 4% owing to excellence in core banking performance and improved operational efficiencies
- Profit Before Tax reaches Rs. 2.84 b, up by 23%, despite making prudential provision buffers to cope up with the Impact of COVID-19
- All Key Profitability Indicators are among the industry best; Net Interest Margin improves to 4.41%; Return on Assets (pre-tax) improves to 1.70%; Return on Equity stands at 14.36%
- Loans and Advances Book grew by 11% to reach Rs. 130 b
- Customer Deposits increased by 15% to reach Rs.141 b
- Current and Savings (CASA) account base soars by 60%, CASA ratio improves by 691 bps
- Net Non-Performing Advances Ratio improves from 2.82% to 2.34%
- Bank remains highly liquid; all statutory liquidity ratios are well above regulatory minimums
- Tier 1 ratio improves to 13.24% due to strong internal capital generation
Pan Asia Banking Corporation PLC reported the best-ever annual financial results during the year ended 31 December 2020, to report a Pre-Tax Profit of Rs. 2.84 billion and a Post-Tax Profit of Rs. 2.05 billion after recording impressive growth rates of 23% and 17%, respectively, demonstrating resilience amidst challenging macroeconomic conditions.
Meanwhile, the bank’s Operating Profit Before Taxes on Financial Services increased by 4%, reflecting excellence in core banking performance and the success of cost containment measures, despite the bank’s fee-based income declining sharply due to reduced business volumes resulting from disruptions caused by COVID-19 pandemic and waiver of fees and charges mandated by the regulator.
The bank’s Earnings per Share (EPS) for the year rose to Rs. 4.63 in 2020 from Rs. 3.96 in 2019. The bank’s Net Asset Value per Share increased by 16% during the year to reach Rs. 34.79 as at 31 December 2020.
The bank has made extra provision buffers especially under stage 1 and stage 2 for probable deterioration in credit quality through management overlay adjustments and identification of elevated risk industries related exposures and staging them under relevant stages. As a result, total impairment charges for the year increased by 40% to record Rs. 1,596 million in 2020 compared to Rs. 1,136 million in 2019.
The bank’s growth in both profit before income tax and profit for the period was also supported by the low financial services tax regime that prevailed throughout the year 2020. Meanwhile, the bank continued to compute income tax and deferred tax liabilities at the rate of 28% as the proposed new rate of 24% is yet to be legislated.
The bank’s net interest margins improved from 4.36% to 4.41% during the year which a commendable feat, given the fact that the bank recognising the entire loan modification loss from COVID 19 loan moratoriums under interest income and the industry-wide deterioration in credit quality.
The bank’s Pre-Tax Return on Assets also improved to 1.70% in 2020 from 1.52% in 2019. Meanwhile, the bank’s Post-Tax Return on Assets also improved to 1.23% in 2020 from 1.15% in 2019. Further the bank reported a healthy Return on Equity ratio of 14.36% during the year under review (FY 2020) which stands among the industry best.
The bank strived for revenue optimisation through portfolio re-alignment and cost management despite sector vulnerabilities that prevailed during 2020. The bank’s cost-to-income ratio improved from 50% to 46% during the year under review owing to the excellent core banking performance which is reflected in the noteworthy growth in net interest income and measures taken to contain overhead costs. In fact, the bank managed to bring down its total operating expenses by Rs. 289 million in 2020 compared to the previous year.
The bank’s total asset base stood at Rs. 176.94 billion as at 31 December 2020 after reporting a growth of over 16%, supported by the expansion in gross loans and advances and other financial instruments at amortised cost. Meanwhile, the bank’s gross loans and advances book recorded a strong growth of over 11% in 2020 to reach Rs. 130.75 billion.
The Customer Deposits recorded a commendable growth of over 15% to reach Rs. 141.08 billion by 31 December 2020. The bank’s CASA base grew by Rs. 12.99 billion phenomenally during the year under review by improving the CASA ratio by 691 basis points. The bank’s gross non-performing loan ratio slipped from 6.31% to 6.73% during the year under review reflecting the industry-wide credit quality deterioration. However, the bank’s net non-performing loan ratio improved from 2.82% to 2.34% due to prudent provisioning.
Commenting on the financial performance, the bank’s Director/CEO Nimal Tillekeratne said: “The bank was able to record this exceptional performance due to proactive decisions and effective execution of strategies capitalising on the opportunities in the macroeconomy while managing the risks. This impressive performance reflects the bank’s resiliency, foresight, agility, and the growing capability to generate strong financial performance even amidst challenging conditions.”
“This is the best ever post-tax profits in a financial year the bank had in its history of 25 years. We have achieved this feat while building additional provision buffers to deal with possible deterioration in credit quality due to the impact of COVID-19 pandemic. This robust performance we recorded in the year with the key contributions from Retail Segments is in line with the set budgets and also gives us the confidence to record even better performance going forward,” Tillekeratne added.
The bank maintains all capital and liquidity ratios well above the regulatory minimum. Both Common Equity Tier 1 Capital Ratio and Tier 1 Capital Ratio as at 31 December 2020 improved during the year to remain at 13.24%. Meanwhile, the bank’s Total Capital Adequacy Ratio improved from 14.31% to 15.74% during the year under review. The bank’s Statutory Liquid Asset Ratios (SLAR) at the year-end 2020 stood at 27.83% and 42.36% for Domestic Banking Unit and Off-Shore Banking Unit, respectively.
Meanwhile, the bank’s Liquidity Coverage Ratio (LCR) under BASEL III stood well above statutory minimums throughout the year 2020. The bank maintained LCR Ratios of 211.57% and 177.36% for all currencies and the rupee, respectively.
In addition to its record-breaking financial performance, Pan Asia Bank also played a pivotal role in making a positive impact in the sphere of sustainability. This saw the bank, which is a pioneer promoter in green financing in Sri Lanka, being awarded the prestigious ‘Global Climate Partnership Award’ last year by Global Climate Partnership Fund, one of the world’s largest climate funds which recognises outstanding performance and impact across categories such as capacities and skills, institutional capacities and green lending offerings, as well as outstanding energy efficiency or renewable energy projects. Further, the bank’s green initiatives have been recognised as the ‘Best Green Bank in Sri Lanka – 2020’ by UK-based Global Banking and Finance Review.
‘Business Today’ included Pan Asia Bank among the ‘Top 30 Corporates in Sri Lanka’ for the second consecutive year in recognition of the bank’s superlative business performance and financial resilience in challenging times. ‘Business Today Top 30’ is an independent ranking of the country’s listed entities based on a comprehensive evaluation of an entity’s financial and non-financial performance in a financial year.
Pan Asia Bank, which changed the financial landscape by introducing many innovative banking products, celebrated its Silver Jubilee in 2020. Acknowledged as one of the fastest-growing banks in Sri Lanka, Pan Asia Bank has earned a solid reputation as an agile and robust banking institution that is based on a strong framework of good governance, sustainability and ethical operations.