Seylan Bank PLC saw its profits slump for the quarter ended June 30, 2022 (2Q22) as the bank provisioned heavily for possible bad loans, although it made substantial gains from its core banking operations during the period.
The bank’s consolidated profit for the quarter under watch was 85 cents or 505.2 million rupees compared to profits of 1.97 rupees per share or 1.15 billion rupees recorded in the corresponding period of the last year.
The bank with an asset base of over Rs 666.4 billion reported net interest income of Rs 10.1 billion for the quarter, up 84% year-on-year (YoY) as interest income increased by 73% year-on-year to reach 11.1 billion rupees.
During the first half of 2022, the bank lent just over 25.7 billion rupees, with its loan book growing by 5.83% to 467.7 billion rupees in the six months. The deposit base of the bank increased by 53 billion rupees during the half-year to reach 531.7 billion rupees.
Seylan said its CASA (current and savings) ratio stood at 31.92% at the end of June 2022.
Supported by its card operations and online banking offerings, the bank recorded net fee and commission income of Rs 1.3 billion for the quarter, up 31% year-on-year.
However, these gains were offset by a more than 300% increase in impairment charges to Rs 7.98 billion for the quarter under review. For the first half, impairment charges increased by 183% to Rs 11.3 billion.
“The bank has increased the provision for impairment to take into account the impact on emerging global and local economic challenges and on the credit risk profile of customers,” Seylan Bank said in an earnings note.
The bank’s bad debt ratio was 4.36% as of June 30, 2022, down from 3.64% six months ago.
Seylan Bank remains solidly capitalized, with capital adequacy ratios well above regulatory minimum requirements and recorded 10.18% Tier 1 total capital ratio and 13.54% total capital ratio.