Seylan Bank records a strong Performance, despite a challenging environment

Bank’s Financial Performance 

 Financial Highlights

• Profit before Income Tax - LKR 10.080 Bn
• Profit after Income Tax - LKR 6.256 Bn up by 33%.
• Total Assets reached to LKR 718 Bn with a YoY growth of 7%
• Overall Statutory Liquid Assets Ratio (SLAR) of 38% as at 31 December 2023
• Total Capital Adequacy Ratio of 15.84% as at 31 December 2023
• Taxes to the Government LKR 7.7 Bn in 2023

Income Statement 

The Net Interest Income of the Bank was reported as LKR 40.1 Bn in 2023 compared to LKR 40.5 Bn reported in 2022, a slight 1% drawback due to volatility in interest rates during the year. The Bank’s Net Interest Margin on Average Total Assets stood at 5.76% in 2023 compared to 6.33% in 2022.Net fee and commission income of the Bank has shown a notable growth of 16 % to LKR 7 Bn from LKR 6 Bn reported in previous year.   The growth in 2023 is mainly attributable to fee income from cards, loans and other financial services.The Bank’s Total Operating Income decreased by 3% to LKR 49.5 Bn in 2023 compared to LKR 51 Bn in the previous year mainly due to decrease in foreign exchange income.

The Bank recorded an impairment charge of LKR 17Bn during 2023 against LKR 26 Bn reported in corresponding period of 2022 with a reduction of 36%. The Bank made impairment provision to capture the changes in the macro economy, credit risk profile of customers, and the credit quality of the Bank’s loan portfolio in order to ensure adequacy of provisions recognized in the financial statements. During the year 2023, the impairment charge on Loans and Advances amounts to LKR 15.3 Bn (2022 - LKR 21Bn) and impairment charge on Foreign Currency Denominated Bonds amounts to LKR 1.5 Bn (2022 – LKR 4.7Bn).The Bank’s Personnel Expenses increased from LKR 8 Bn in 2022 to LKR 9.1 Bn in 2023, a 15% growth mainly due to increase in staff benefits and adjustments made as relief allowances to absorb high cost of living and taxes.  Other Operating expenses and depreciation and amortization expenses too increased by 28% to LKR 9.3 Bn during 2023 compared to LKR 7.3 Bn reported in 2022 mainly due to increase in prices of consumables and services. The Bank will continue to take relevant measures to curtail costs through various cost initiatives.

The Bank’s total operating expenses increased by 21% to LKR 18.5 Bn during the period under review compared to LKR 15.2 Bn recorded in the previous year.The Bank’s Value Added Tax on Financial Services increased by 31% amounting to LKR 3.45Bn compared to LKR 2.65 Bn recorded in the previous year due to increase in VAT liable income. Additionally, Social Security Contribution Levy (SSCL) was imposed with effect from 01 October 2022 at the rate of 2.5% on the value addition liable for Value Added Tax on Financial Services. The charge for the year increased from LKR 0.13 Bn in 2022 (only for 3 months) to LKR 0.48 Bn.The Bank’s Income Tax Expense reported a growth of 99.5% to LKR 3.82 Bn in 2023 compared to LKR 1.92 Bn reported in 2022, mainly due to impact form rate change and increase in liable income. The Corporate Tax Rate was revised with effect from 01 July 2022 from 24% to 30 % and provisions recorded accordingly.  The Bank recorded a Profit before Tax (PBT) of LKR 10.08 Bn for the period under review with a 52% growth over the previous year while recording a Profit after Tax (PAT) of LKR 6.26 Bn for the year with a 33% growth over the previous year, despite challenging market & economic conditions that prevailed during the period.

Statement of Financial Position

The Bank’s total assets grew by 6.7% during the year under review to reach LKR 718Bn as at 31 December 2023 compared to LKR 673 Bn recorded in the previous year demonstrating the sustained growth of the Bank over the years. Cash and Cash Equivalents, Placements with Banks, Financial Assets recognised through Profit or Loss (Measured at Fair Value), Financial Assets measured at Fair Value through Other Comprehensive Income etc. mainly contributed to the growth in total assets. 

The Banks’s Asset Quality Ratios of Impaired Loan (Stage 3) Ratio and the Impairment (Stage 3) to Stage 3 Loans Ratio stood at 3.85% and 68.29% in 2023, compared to 4.98% and 54% in 2022, which reflects a significant improvement in both ratios from the previous year. This is mainly due to appropriate provisions made by the Bank, close monitoring of impaired loans and strengthening recovery actions & processes during the year.The Bank’s total Deposit Base grew by LKR 44 Bn during the year 2023 to LKR 591 Bn compared to total Deposits of LKR 547 reported in the previous year. The Bank’s LKR Deposits reported a growth of LKR 38 Bn and FCY Deposits reported a growth of LKR 6 Bn. The Bank focused on growing Deposits by canvassing new to Bank deposits, while retaining its existing customer deposit base. 

The Bank’s CASA base grew from LKR 163 Bn in 2022 to LKR 177 Bn in 2023 as of 31 December, which is a 8% growth from the previous year. CASA ratio stood at 30% in 2023.Key financial ratios and indicators of Seylan Bank PLC remained strong as of 31 December 2023.The capital adequacy ratios were well above the regulatory minimum requirements and recorded 12.52% as Common Equity Tier 1 Capital Ratio & Total Tier 1 Capital Ratio and 15.84% as the Total Capital Ratio. The Capital Adequacy Ratios have increased compared to previous year mainly due to increase in Profits & Reserves for the year ended 31 December 2023.The Bank maintained the SLAR well above the statutory requirement, during year under review. The Statutory Liquid Asset Ratio (SLAR) for the Overall Bank, Bank’s Domestic Banking Unit and the Bank’s Foreign banking unit were maintained at 38.04%, 38.51% and 23.28 % respectively as at December 2023.

The Bank also maintained the LCR well above the statutory requirement. The All Currency LCR and the Rupee LCR were maintained at 338.42 % and 355.16% respectively.    The Return on Equity (ROE) stood at 10.88% for the year under review compared to 8.85% recorded in 2022. The Return on Average Assets (before tax) was recorded as 1.45% for the year under review compared to 1.04% recorded in 2022. The Bank’s Earnings per Share stood at LKR 10.17 as at end of 2023 compared to LKR 7.66 as at the end of the previous year. The Bank’s Net Assets Value per Share stood at LKR 98.31 as at the end of 2023 (Group LKR 101.36) compared to LKR 94.24 reported as at the previous year end (Group 97.27).