Sri Lanka's HNB profits flat in March

May 13, 2013 (LBO) - Sri Lanka's Hatton National Bank group profits were flat at 1.22 billion rupees in the March 2012 quarter, as losses ticked up amid slow loan growth, interim accounts showed.

The bank reported earnings of 3.30 rupees per share for the quarter. The stock closed at 168 rupees down 2.80 rupees.

Interest income rose 37 percent to 13.8 billion rupees, interest expenses rose at a faster 46 percent to 7.6 billion rupees but the bank grew net interest income 27 percent to 6.2 billion rupees.

Fee income rose 9 percent to 957 million rupees. There was a net loss of 1.0 billion rupees in trading, compared to a 770 million rupee profit a year earlier.

Loan loss provisions rose to 1.0 billion rupees in the March 2013 quarter from 589 million a year earlier.

Loans and receivables were rose one percent to 307 billion rupees during the quarter. Under new international financial reporting standards total bad loans are no longer disclosed to shareholders through the balance sheet.

But at stand alone bank level the gross non performing loan ratio rose to 4.86 percent by end March 2013 from 3.66 percent in December. Net non-performing loans rose to 3.04 percent from 1.82 percent.

A group level number was not available.

Sri Lanka is recovering from a balance of payments crisis and a sharp spike in inflation triggered by state manipulation of electricity and diesel prices with bank credit which was ultimately accommodated by central bank credit.

Low or negative loan growth, rising bad loans are usual consequences of balance of payments crisis.

After rates were raised the state and los making state enterprises continued to borrow from the banking system, crowding out private borrowing and keeping lending and deposit rates high, and slowing the economy.

Last week the Central Bank cut policy rates by 50 basis points.

Group gross assets rose one percent to 465 billion rupees and net assets fell 1 percent to 52 billion rupees.