Sampath Bank posts Rs. 8 bn PAT against COVID-19 backdrop | Daily News

Sampath Bank posts Rs. 8 bn PAT against COVID-19 backdrop

Harsha Amarasekera, Chairman, Sampath Bank PLC (left) and Nanda Fernando, Managing Director, Sampath Bank PLC
Harsha Amarasekera, Chairman, Sampath Bank PLC (left) and Nanda Fernando, Managing Director, Sampath Bank PLC

Sampath Bank recorded a decline in Profit After Tax (PAT), from Rs 11.1billion in 2019 to Rs 8 billion for year 2020. Despite this being a 28% decline, it is nonetheless a noteworthy result against the backdrop of the COVID-19 induced economic slowdown locally and globally.

Meanwhile, the Bank registered a Profit Before Tax (PBT) of Rs 11.2 billion compared to Rs 15.5 billion recorded in 2019, a decline of 27.9%. The PBT and PAT of the Group for the year ended December 31, 2020 stood at Rs 11.9 billion and Rs 8.4 billion respectively, denoting a decline of 27.2% and 27.6% respectively.

With the government-led economic stimulus package and interest caps introduced by the regulator bringing pressure on the Bank’s Net Interest Margins (NIM), in 2020 the Bank registered a NIM of 3.3% which was 116 basis points lower than the year 2019. Total Interest Income for the year 2020 decreased by Rs 14.9 billion to Rs 88.6 billion compared to Rs 103.5 billion registered in the previous year, reflecting a dip of 14.4%. Total Interest Expenses too reported a decline of 11.6% to Rs 54.8 billion in 2020 from the Rs 61.9 billion recorded in 2019.

Meanwhile as per the ‘Modification Method’ prescribed in the Sri Lanka Accounting Standards (SLFRS - 9), the Bank recognised a ‘Modification loss’of Rs 3.1 billion against the interest income, on account of the debt moratorium phase I.

The combined impact of the lower interest regime and the concessionary interest rates charged during debt moratorium phase I drove down the Bank’s NII by 18.6% from Rs 41.6 billion in the previous year to Rs 33.8 billion in 2020. The Bank continued to closely monitor all variables affecting the NII supported by necessary follow up action to prudently manage the same throughout the year.

Sampath Bank reported net fee and commission income of Rs 8.5 billion in 2020, a decline of 15.7% against the previous year.

The Bank’s ability to generate fee based income was adversely affected by the 2 month long island-wide lockdown as well as due to region-wise mobility restrictions imposed by the authorities from time to time in order to control the spread of COVID-19.

The resulting low level of economic activity and restricted hours of business operations, had a sizable impact on the volume of fee based transactions carried out by the Bank during the year. Further, suspending or refunding of certain charges by the Bank, considering the current difficulties faced by customers due to the COVID-19 pandemic, also negatively impacted the Bank’s fee based income.