Bank PAT of Rs 4.5 bn
Total Deposits grow by Rs 55 bn
Supports over 80,000 COVID affected customers as a responsible SIB
Maintains stability with CAR at 19% and LAR at 34%
HNB posted resilient financial results during the 1H 2020 amid the unprecedented disruptions of COVID-19 pandemic with Group PAT for 1H increasing by 6.8 % YoY to Rs 5.5 Bn while Bank level PAT declined by 7% YoY to Rs 4.5 Bn.
“Sri Lanka’s performance in managing the transmission of COVID-19 has been outstanding. The health impact has been largely contained and the economic impact of the pandemic will remain a challenge in the near term, given the depressed global conditions it has spawned. To address these economic challenges, the Government has taken bold steps to support the affected by relaxing Monetary Policy in an effective way to revive economic activity, and extending debt moratoriums to those affected – measures that may need further support from the Government given that the recovery will most likely be a protracted one across most sectors, both locally and globally. Consequently, the medium term economic recovery will be closely correlated with the pace at which the COVID 19 pandemic is managed globally.” HNB Chairman, Dinesh Weerakkody said.
As a consequence of the low interest rate regime, the prime lending rate (AWPLR) reduced by 130 bps from December 2019, compounded by low demand for credit. This in turn impacted 1H interest income which declined 8.8% YoY to Rs 53.8 Bn. Interest expenses also declined by 5.2% YoY to Rs 31.4 Bn leading to a drop in Net Interest Income (NII) by 13.3% YoY to Rs 22.4 Bn.
The restrictions on non-essential imports, overall decline in exports and marked drop in Card spends due to lifestyle changes resulting from the pandemic, drove Net Fee Income down by 22.2% YoY to Rs 3.5 Bn. However, a strong surge in demand for digital banking services enabled an increase in fees from digital channels.
Meanwhile, exchange rate movements during the year in tandem with a decline in swap volumes and premiums facilitated an exchange gain of Rs 1.5 Bn as opposed to a loss of Rs 577.2 Mn recorded during 1H 2019.
“With the outbreak of COVID-19, we had to move rapidly to reassess our priorities and restructure operations in alignment with the ‘new normal’. Accordingly, our key focus has been to support customers in need, while ensuring maximum health and safety measures for our Staff and Customers, as well as maintaining stability of the Bank and intensifying our pursuit of digital and technological transformation. As a responsible domestic systemically important bank (D-SIB) we have supported over 80,000 customers who were affected economically during the pandemic by way of moratoriums on loan repayments during the past few months. The Bank has also provided working capital financing under the CBSL relief schemes as well as through the Rs. 5Bn fund set up by HNB to assist affected SMEs.
During the lock-down period, we supported both customers as well as merchants to carry out transactions through our digital payment channels including SOLO, MoMo and IPG. We moved a further step forward by launching AppiGo in May 2020 to support businesses to rapidly set up their own e-commerce presence. Our breakthrough Payments App, HNB SOLO was enhanced with added features and this continues to be an ongoing process. In August, we also upgraded our core- banking system to the latest version of Finacle, enabling us to provide a far superior experience to our customers,” HNB MD/CEO Jonathan Alles said.
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Unlimited music streaming platform in Sri Lanka
SLT-Mobitel, the nation’s ICT and Telecommunications Service Provider recently partnered with Spotify, to mark their launch in Sri Lanka. Spotify is a paid premium music streaming app which allows subscribers to listen to music to their hearts content. Both, SLT-Mobitel Post-Paid and Pre-Paid customers will now be able to enjoy Spotify by activating a monthly recurring subscription or one-time subscription plan and access unlimited music streaming and downloading facilities.
The subscription charges will get added to the user’s customary billing, where payment will be deducted in real time. Starting from the payment date, the user will be able to access Spotify and download their favourite songs, for the next 30 days. Users who sign up for their first monthly subscription will receive an additional one month, courtesy of Spotify. The one-month subscription plan is not applicable with one-time subscription plans. SLT-Mobitel data rates, depending on the user’s respective broadband charges, will apply.
Spotify also has some exciting features that will provide SLT-Mobitel customers with the opportunity to listen to ad-free music, access millions of uninterrupted music under one platform, play any song they like, anywhere they go, and also be able to enjoy their music offline.
SLT-Mobitel customers can select their preferred premium package under four categories; Individual, Duo, Family, Student. Each category has recurring and non-recurring plans. After one month of free streaming, the package will activate once the offer period terminates. While both, the Individual and Student premiums are limited to one account user, the Duo package offers two accounts and the Family premium is accessible through six accounts. To view Spotify plans, users can log on to https://spoti.fi/3aLWvce
Sri Lanka using ‘sovereign power’ over economy: CB Governor
by Sanath Nanayakkare
Anyone conversant with the elements of a political economy would know that Sri Lanka is using its ‘sovereign power’ to manage the different dynamics of the economy in a sustainable manner, Professor W. D Lakshman Governor of the Central Bank said on Wednesday.
“Some critics are saying that we adopt a so-called modern monetary theory. That’s not the case. In fact, Sri Lanka is using its sovereign power in a number of economic aspects to honour its external debt repayment commitments as well as to reduce its debt burden in the medium term as well as achieve resilient growth in the medium to long term, he said.
“We make policy decisions to boost our gross foreign reserves, meet our external debt servicing, to facilitate monetary expansion, to boost our GDP growth, to strengthen our current account balance and manage our domestic and external economic variables in a sustainable manner. This is not a modern monetary theory. This is an age-old tool used by central banks around the world when the circumstances demand it, he said.
“Certain trade-offs will be necessary when dealing with an economy which has a big fiscal gap to bridge. There are efforts to push Sri Lanka towards the IMF again which would in turn have influence on our policymaking. We have taken policy measures to stabilize the economy and we have adequate reserve levels to meet our debt repayments. Meanwhile, we are in negotiations with overseas central banks and multilateral agencies to further boost our reserve level and it would materialise within a matter of weeks,” he noted.
“One of the tools the Central Bank has introduced is in respect of repatriation of export proceeds into Sri Lanka and conversion of such proceeds into Sri Lankan rupees in order to strengthen the foreign exchange situation of the country,” he said.
The Governor made these remarks while delivering the keynote speech at a webinar organised by the Veemansa Initiative led by its Managing Director Luxman Siriwardene – the former Executive Director of Pathfinder Foundation.
The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?’
Professor Sirimal Abeyratne, Prof. Sumanasiri Liyanage, Dr. Nishan de Mel and Dr. Ravi Liyanage were the other speakers on the panel.
CSE on the rebound; indices close positive
By Hiran H.Senewiratne
CSE produced signs of a rebound yesterday with both indices closing positive, though turnover remained low. Central Bank Governor W.D Lakshman’s recent statement on managing foreign reserves gave some boost to the market yesterday, stock market analysts said.
The index experienced a zigzag movement within the early hours of trading; thereafter, it recorded a slight up-trend as it reached its intraday high of 7,439. Later, the market witnessed a down-trend at mid-day, followed by a sideways movement and closed at 7,372, gaining 43 points during the month of February, market sources said.
It is said the banking sector dominated turnover with a contribution of considerable parcel trades in Sampath Bank, Commercial Bank and HNB.
Further, the Commercial Bank’s impressive quarterly results during the recent turbulent period also built investor confidence. Commercial Bank was able to register a18 percent net interest income when other banks were reporting a decline. Its share price increased by Rs. 3 or 3.5 percent. On the previous day, its shares started trading at Rs. 85 and at the end of the day they moved up to Rs. 88. Due to the positive growth results, the bank announced a Rs. 4.40 dividend per share, plus a Rs. 2 script divergent for every share.
Further, Sampath Bank shares also appreciated in both crossing and retail. In crossings its shares appreciated by Rs. 1.At the end of the day they moved up to Rs. 154.50. In the retail market, its shares moved up by Rs. 2 or 1.3 percent. Previously, its shares fetched Rs. 154 and at the end of yesterday they moved up to Rs. 156.
Amid those developments, both indices moved upwards. The All Share Price Index went up by 104.48 points and S and P SL20 rose by 67.78 points. Turnover stood at Rs. 3 billion with four crossings. Those crossings were reported in Sampath Bank, where 3.9 million shares crossed for Rs. 602.2 million, its share price being Rs. 154.50, HNB 375,000 shares crossed for Rs. 39.4 million, its shares traded at Rs. 105, Pan Asia Power 9.5 million shares crossed for Rs. 33.2 million, its shares traded at Rs. 3.50 and Access Engineering 1.2 million shares crossed for Rs. 28.2 million; its shares traded at Rs. 24.
In the retail market top five companies that mainly contributed to the turnover were, Expolanka Rs. 450 million (10 million shares traded), JKH Rs. 205 million (1.3 million shares traded), Browns Investments Rs. 199 million (34.9 million shares traded), Sampath Bank Rs. 191 million (1.2 million shares traded) and Dipped Products Rs. 137.7 million (2.8 million shares traded). During the day 101 million share volumes changed hands in 18046 transactions.
During the day, Expolanka, the biggest contributor to the turnover, saw its share price appreciating by Rs. 6.20 or 15 percent. Its share price quoted on the previous day was Rs. 41 and at the end of trading yesterday it moved up to Rs. 47.
Sri Lanka’s rupee quoted wider at 193.50/195.50 levels to the US dollar in the spot next market on Thursday while bond yields remained unchanged, dealers said. The rupee last closed in the spot market at 194.50/195.00 to the dollar on Wednesday.