Pan Asia Banking Corporation PLC (PAB) reported Rs. 498.0 million in profit before tax for the quarter ended in March 31, 2018 (1Q ’18) powered by a steady growth in new loans and improvement in overall margins which was resulted by prudent asset – liability pricing amidst rising market interest rates. This enabled the bank to increase its net interest income by 11.0% to Rs.1.34 billion for the quarter from Rs.1.21 billion recorded in the same period last year.
The core banking performance was supported by the non-fund based incomes such as fee incomes and trading gains. The bank managed to increase its net fee and commission income by a modest 8.0% to Rs.368.12 million from the same period in 2017.
The net trading gains rose sharply to Rs. 199.58 million during the quarter from Rs. 69.83 million in the same period a year ago as the bank sold its short term investments in the trading portfolio realizing a sizable capital gain.
As a result of these fund and non-fund based incomes, the bank increased its total operating income by 17.0% on year to Rs.1.99 billion.
The sound top-line performance was somewhat softened by the higher provisions made against possible bad loans and the higher tax liability for the period.
The collective impairments rose sharply to Rs.183.83 million from a previous year reversal of Rs. 38.32 million due to the relatively strong growth in the new loans across all segments – Corporate, Retail, SME and Credit Cards. Collective impairments rise as new loans grow.
The individual impairments or the provisions made against selected individual customers declined by 8.0% during the quarter against the same period last year as few clients settled their facilities resulting in reversal of provisions made earlier for them. The income tax charge for the quarter was Rs.185.16 million, up 16% from the same period last year which resulted in a profit after tax of Rs. 312.8 million, down 11.0% from the same period last year.
Pan Asia Bank’s Director/ Chief Executive Officer Nimal Tillekeratne said,
“After an year of internal restructuring, re-strategising and policy re-setting, now is the time the bank slowly gaining its growth momentum. We need sustainable and a durable growth, hence we will gradually accelerate our growth while tightening our credit underwriting standards, risk management and post disbursement monitoring to ensure that there won’t be any negative spillover effects on asset quality from our business growth going forward.” By the end of March, the bank’s capital adequacy levels against the BASEL III accord remained above the minimum requirements. Accordingly the Common Equity tier I ratio and the tier I ratio stood at 10.66% each against the regulatory minimums of 5.75% and 7.25% respectively. The total capital adequacy ratio or the tier II capital ratio stood at 12.53% against the regulatory minimum requirement of 11.25%.