Profits low for Seylan Bank in first nine months

Seylan Bank, subsidiary of Ceylinco Group has recorded low net profits for the September quarter which fell 33 per cent to Rs. 101 million from a year ago, interim accounts filed with the Colombo Stock Exchange.

Net profits for the nine months ending September 30, 2008 were down 34 per cent to Rs. 546 million compared with the same period last year.

Therefore analysts said Seylan Bank managed only modest growth in net interest income amid a steep rise in interest costs, while non-interest income growth was also slow in both the September quarter as well as in the nine month period.

Analysts said the 12-month growth in both net loans and advances as well as deposits was ‘subdued’.

However, Group net interest income for the September quarter grew six per cent to almost Rs. 1.9 billion with interest expenses rising 28 per cent to Rs. 3.9 billion and interest income up 20 per cent to Rs. 5.8 billion.

Non-interest income rose five per cent to Rs. 682 million.

Non interest expenses, which rose 16 per cent to Rs. 2.1 billion, were likely to have been affected by inflationary market conditions, analysts said.

Staff costs went up 17 per cent and provision for retirement benefits were up 43 per cent.

Analysts also noted a steep rise in provisions for bad and doubtful debts, with the non-performing loans ratio also rising.

NPLs rose 32 per cent to 249 million rupees with specific provisioning up by 54 per cent to 326 million rupees.

Total performing loans of the Bank as advances were almost flat at 93.7 billion rupees as at September 30, 2008 while total deposits grew five per cent to 119 billion rupees and total assets were 166 billion rupees.

At bank level the net interest margin eased to 4.73 per cent as at September 30, 2008 from December 31, 2007 while return on assets fell to 0.81 per cent from 1.04 per cent.