Hatton National Bank (HNB) PLC continued its steady performance in Q2 2023, posting a 1H 2023 PBT of Rs 13.6 bn, while 1H 2023 PAT stood at Rs 8.6 bn, growing 56% YoY.
The Group made a consolidated PBT and PAT of Rs 15.2 bn and Rs 9.8 bn.
Although interest rates tapered off towards the latter part of Q2 2023, 1H 2023 rates still remained relatively higher when compared with the corresponding period in 2022, enabling the Bank to report a net interest income of Rs 59.3 bn in 1H 2023, up 48% YoY. Net fee and commission income grew by 12% YoY to Rs 8.0 bn, driven by increased activity in cards, remittances, trade and digital platforms.
On the back of improved foreign inflows and the consequent rising dollars in circulation, the Rupee appreciated by approx. 15% YoY in the first six months of 2023. Currency volatility caused the Bank to record a net exchange loss of Rs 3.8 bn for 1H 2023, primarily stemming from revaluation losses of FCBU retained earnings.
Despite the challenges, the Bank continued to prioritise asset quality, with the net stage III loan ratio at 4.77% and stage III provision cover at 51.4% as at end June 2023. In terms of impairment provisions, the Bank recorded a cumulative impairment of Rs 28.3 bn in 1H 2023 which included impairment on loans and advances as well as on investments in foreign currency denominated government securities.
Managing Director and Chief Executive Officer of Hatton National Bank Jonathan Alles said, “We commend the government’s DDO plan – which insulated the banking sector from any reprofiling of Treasury Bills or Bonds. This in turn enables banks, inundated with mounting credit impairment and higher taxes, to use much needed capacity insupporting the revival of key sectors and the broader economy.”
The Bank’s total effective tax rate for 1H 2023 increased to 53%.
Since March 2023, the asset base marginally grew to Rs 1.8 trillion as at end June 2023. Given the tight credit conditions and exchange rate volatility prevailing for a majority of the June quarter, the Bank’s gross loan book dropped to Rs 986 bn as at end of 1H 2023. Meanwhile, as deposits remained attractive to customers, the Bank’s deposit base reached close to Rs 1.5 trillion at the end of June 2023.
Compared to Q1 2023, the Bank recorded stronger Tier I and Total Capital Adequacy Ratios of 12.48% and 15.58% against the minimum statutory requirements of 9.5% and 13.5%. respectively, with the provision to drawdown a further 250bps from the Capital Conservation Buffer. HNB’s liquidity levels also continued to be strong and well above the regulatory minimum requirements, with Statutory Liquid Assets ratio around 40% (vs. a 20% requirement) and all currency Liquidity Coverage ratio at 341.5% (vs. a 100% requirement).