Sampath Bank profit up 53% to $17.31mn

Yet the lender’s net interest margin slid to 4.11% which sliced down a substantial amount of net interest income.

Sampath Bank is gearing up to changing its strategy next year to focus on volumes targeting aggressive growth pattern and challenging the deposit and lending rates in the market.

“In the coming months and next year our growth pattern will continue aggressively and challenge deposit rates and lending rates in the market,” Sampath Bank Managing Director Harris Premaratne said at an investor forum organized by the bank in Colombo last week. The bank recorded a profit after tax of Rs. 1.9 billion ($$17.31mn) growing at a rate of 52.7% over the same period the previous year.

The bank noted that its growth in advances and deposits are far above industry average and the strategy adopted is to get volumes as the net interest margins are considered to be under threat. The NPL was down by 3.19% and plan to achieve around 2% next year by attracting state businesses into the bank, he said.

They intend to attract customers with good lending rates and will be targeting corporate business in the big cities while looking at retail outside to establish a stable customer base, Mr. Premaratne said.

The Cost/Net Income Ratio of the bank rose to 59.86% for the 1H of 2011 which is expected to undergo a natural drop with new branches raising business volumes in the future.

The Net Interest Margin dropped from 5.27% in the 1H 2010 to 4.11% in the 1H 2011, eroded a substantial amount of Net Interest Income. The loss due to the net interest margins falling this year was Rs.1.2 billion ($10.93 million).

View the full story in The Sunday Times.