Sampath 31.03.2013

http://www.cse.lk/cmt/upload_report_file/431_1368614637245.pdf

All these reports not annouced in Corporate disclosure update on the homepage. Anyways although net income improvement, Other operating profit decline (exchange gain) has resulted in reduction in net income.

Last year other operating income is 1.6b, unusual amount from Rupee depreciation should be around 1.2b i.e. Rs. 5 per share.

this year EPS Rs.6 is totally on operating profit, so this year there is at least 50% growth of operating profit EPS

So why sampath has come down?

Sampath Bank group net profits fell 31.4 percent to Rs. 1.05 billion during the quarter ended March 31, 2012 from Rs. 1.54 billion a year earlier while net profits at bank level fell 32.7 percent to Rs. 982.8 million from Rs. 1.46 billion a year ago.

"Despite many challenges posed by the external market forces on the banking sector, which included the slower credit demand and excess liquidity conditions, Sampath Bank group has been able to record a PAT of Rs. 1.056 Bn for the 1st Quarter 2013, with the Bank recording PAT of Rs. 982.8 Mn," the bank said in a statement.

"In addition, the Bank which recorded a revaluation gain of Rs 1.01 Bn in the 1st quarter 2012 on its FC Reserves of the FCBU, had to absorb a revaluation loss of Rs 96.6 Mn from this source in the 1ST quarter 2013, which figures are included under ‘Other Operating Income’ of the published accounts. This drop was solely due to the appreciation of LKR against the US$ by Rs.0. 90 during this period, as against the significant depreciation of LKR by Rs. 14.30 during the corresponding period in 2012. Discounting the effect of this factor, the Bank has in fact been able to record a PAT growth of 19% from its normal trading operations in the 1Q2013, as against the 1Q2012.

"Net Interest Income, which is the main source of income from the fund based operations and representing over 50% of the total operating income, rose from Rs 2,438.0 Mn in the 1st Q 2012 to Rs 3,190.3 Mn in 1st Q 2013, recording a significant growth of 30.9%. This significant growth in NII was largely due to the high growth recorded by the Bank in key business volumes, namely, Rs.12 Bn. Increase in customer advances (6.4%), Rs.18 Bn. Increase in total assets (5.8%) and Rs.12 Bn. increase (5.0%) in total deposits during the 1st Q 2013, over the base figures on 31.12.2012. It was also possible to improve the Net Interest Margin (NIM), by 0.28% over the previous year’s same period, despite the increase in cost of funds, mainly due to timely re-pricing of products and better managing the fund base, through ALCO activities.

"Operating expenses of the Bank which stood at Rs. 2,124.7 Mn in the 1st Q 2012, rose to Rs. 2,307 Mn in the 1st Q 2013, recording an increase of Rs. 182.3 Mn. This growth in operating expenses was largely due to increase in staff cadre and also salary increment given to the staff effective 01.04.2012. The Bank anticipates that the cost increase rate would be somewhat lower in years to come, in view of the moderation in the branch expansion program, given the fact that Bank’s branch network has now adequately covered most of the potential locations of the country.

"Though, the Specific Provision Coverage Ratio recorded a marginal decline and stood at 70.59 % at the end of the 1st Q 2013, due to the recoveries made against the underlining NPLs, this ratio still remained at a high level, compared to the industry average of 35.6 % as at 31.03.2013. Together with the general provisions, the total Provision Coverage Ratio of the bank stood at 87.09 % as at 31.03.2013.

"Impairment provision on Individually Significant Loans rose from Rs.42.8 Mn in 1Q2012 to Rs. 67.8Mn in 1Q2013 by Rs. 25 Mn. Similarly, the Collective Impairment provision rose to Rs. 298.4Mn in the 1Q 2013 (which included an impairment provision of Rs. 184Mn made against the pawning advances), as against Rs.38.8 Mn in 1Q2012. In addition, the impairment testing on Financial Investments (Treasury Bills and other trading securities) resulted in a gain of Rs.74.9 Mn for the 1 Q 2013, as against an impairment provision of Rs 119.5 Mn in the 1st Q 2012. This was largely due to mark to market gain of Rs.107.6 Mn on the Bank’s trading portfolio of shares, off–setting the mark to market loss of Rs. 32.7 Mn on the Treasury Bill portfolio held.

"The growth rates in deposits, advances and total assets recorded by the Bank during the 1st Q 2013, which amounted to 5.0%, 6.4% and 5.8 % respectively, compared well with the industry’s growth rates of 4.75%, 2.64% and 5.27% recorded in the respective areas during the period.

"This ratio marginally rose from 22.40% as at 31.12.2012 to 22.95% as at 31.03.2013. Though this ratio was somewhat above the minimum requirement of 20%, it was not as high as the industry average of around 32.9%, due to the prudent trade-off maintained by the bank between its liquid and earning assets.

"The capital adequacy ratios stood at 10.91% (Tier I) and 12.63% (total) as at 31st March 2013, recording a marginal deterioration compared to the levels as at 31.12.2012, mainly due to the credit expansion during the 1st Q 2013. Nevertheless, they remained well above the minimum regulatory requirements of 5% and 10%.

"As approved at the last AGM held on 4th April 2013, the final dividend of Rs 12/= per share was paid in April 2013, 50% in cash and 50% in the form of scrip dividends. These scrip dividend shares were priced at Rs. 180.10/=. This dividend of Rs 12/= per share paid for 2012 was much above the minimum dividend of Rs 2.66 payable under the Deemed Dividend requirement. It also represented a dividend pay-out ratio of 38.0% for 2012, as against 36.9 % in 2011."
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=79101

D.G.Dayaratne wrote:So why sampath has come down?

SAMP has not come down, so all major banks. they have performed better than last year.

The problem is last year they had exceptional gain( one time) of foreign currency revaluation, so last year they showed a bigger overall profit, which investors believed the banks have done well.

if the foreign currency revaluation was not there lat year SAMP EPS should be something like Rs.5 not 9.

Compare to Sampath financials ,Commercial Bank financials is better. Their profit fell is 19%