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Sampath Bank’s Robust Performance in 2023: Resilience, Profitability, and Strengthened Capital Base

Sampath Bank has exhibited remarkable resilience and a commitment to stakeholder interests amid challenging economic conditions, as reported by the President’s Media Division. Bolstered by well-executed business strategies, increased vigilance, and proactive risk management measures, the bank navigated adeptly through the year.

Despite signs of economic recovery in 2023, Sampath Bank remained dedicated to supporting customers facing ongoing challenges accumulated over previous years. The Credit Nursing Unit played a pivotal role in providing relief measures, including tailor-made repayment plans, restructures, and rescheduling solutions, to alleviate stress for distressed customers. The bank also offered financial counseling and business advisory services, empowering customers to access fresh equity and resources for business transformation, creating stronger and more resilient enterprises.

In line with its Corporate Social Responsibility (CSR) commitments, Sampath Bank initiated various projects under the “Weweta Jeewayak” program, contributing to rural economic growth. The bank also increased its focus on climate action goals, investing in the “A Breath to Ocean” initiative, particularly in turtle conservation, coral restoration, and mangrove rehabilitation.

Financially, Sampath Bank demonstrated robust performance with a Profit Before Taxes on financial services reaching Rs 38.4 Bn, marking an impressive 89.9% increase over the previous year’s achievement. However, due to higher tax expenses, the Profit After Tax (PAT) showed a 30.5% improvement, rising from Rs 13.1 Bn in the previous year to Rs 17.1 Bn for the year ending December 31, 2023.

The Group’s resilience was evident, achieving a profit after tax of Rs 17.9 Bn, reflecting a substantial 27.5% growth over the previous year.

Financial Highlights:

Net Interest Income (NII): Despite a marginal 1.6% decline in NII to Rs 72.3 Bn, strategic re-pricing and stringent portfolio management contained the impact on the Net Interest Margin (NIM), which stood at 5.16%.

Net Fee and Commission Income: A 2.9% decrease was noted due to lower income from credit and trade-related activities, partially offset by growth in fees from cards, electronic channels, and remittance-related activities.

Net Trading and Other Income: Capital gains of Rs 591.7 Mn were registered, while a Net Other Operating Loss of Rs 1.6 Bn included an exchange loss of Rs 2.4 Bn due to LKR appreciation against the USD.

Impairment Charge: Prudent provisioning policies resulted in a total impairment charge of Rs 20.1 Bn, with a decrease in the charge on loans and advances and a net impairment charge of Rs 1.8 Bn on other financial instruments.

Operating Expenses: Witnessing a 15.7% increase, driven by inflation-induced costs and higher taxes, operating expenses contributed to a cost-to-income ratio of 35.7%.

Taxation: Tax expenses on financial services and income tax increased, impacting the Profit After Tax (PAT) growth.

Total Comprehensive Income: Totaled Rs 25.6 Bn, reflecting a 69.2% increase over the previous year.

Assets: The asset base increased by 16.4%, primarily driven by higher investments in Government debt securities.

Liabilities: A 16.4% year-on-year increase, led by deposit base growth and successful issuance of BASEL III compliant debentures.

Equity: Total equity strengthened to Rs 147.9 Bn, up by Rs 21.5 Bn, supported by improved profitability.

Dividend: The Board recommended a final cash dividend of Rs 5.85 per share, subject to shareholder approval.

Capital and Liquidity: All capital ratios improved, with CET 1, Tier 1, and total capital ratios standing at 16.35%, 16.35%, and 19.56% respectively, well above regulatory minimums.

Other Key Ratios: Return on Average Shareholders’ Equity (after tax) improved to 12.65%, and Return on Average Assets (before tax) stood at 2.12%.

External Rating: Fitch Ratings affirmed Sampath Bank’s National Long-Term Rating at A(lka) with a Stable outlook on October 5, 2023.

Sampath Bank’s robust performance in 2023 reflects its ability to navigate challenges, prioritize stakeholders, and maintain financial strength, positioning it for continued success.

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