Banking Sector 1H2013 Earnings Review__ - Net Earnings Dip Despite Robust Core Profit Growth - 09...

7/29/2019 Banking Sector 1H2013 Earnings Review__ - Net Earnings Dip Despite Robust Core Profit Growth - 09 Sep 2013

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1

Banking Sector 1H2013 Earnings ReviewNet earnings dip despite robust core profit growth

Udeeshan Jonas

Reshan Wediwardana

CAL Research

September 2013

60%

37% 35% 33% 32%

9%

-3%

-114%

SAMP NTB HNB NDB PABC COMB SEYB UBC

15%

5% 3%

-2%-11% -13%

-39%

-55%

HNB NTB SEYB NDB UBC COMB SAMP PABC

1H2013 Net Earnings YoY Growth 1H2013 Core Profits YoY Growth

See Page 50 for important disclaimer


2/51

Banking Sector 1H2013 Earnings Review

I. Easing monetary stance yet to reap results

II. Core banking profits continue to remain robust

III. Macro changes challenge credit quality and netearnings

IV. CALs top 5 picks to avg. 36.4% vs. our coverageuniverse avg. of 30.2%

V. Appendix : Summary Financial Statements

2

Page

3

12

20

32

39


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I. EASING MONETARY STANCE YET TOREAP RESULTS

3


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I. Easing monetary stance yet to reap results

The Central Bank enforced an easing monetary stance from Jan 2013

In 1H2013, CBSLs monetary easing led to a 254bps decline in AWPLR

Deposit rates followed a similar trend declining c.280bps YTD

However, loan growth continues to remain subdued (avg. of 6.5% YTD) aseconomic conditions remain sluggish

Private sector credit yet to pick up despite the rate cut (+4.4% Jan-Jul 2013

vs. +13.2% Jan-Jul 2012)

CAL revises private sector credit growth downwards to 12% for 2013E(previous 16%)

4


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The Central Bank enforced an easing monetarystance from Jan 2013

The 18% cap imposed on loan growth for banks in 2012 was removed fromJan 2013

Policy rates were cut by 50bps in May 2013

Statutory Reserve Ratio was cut by 200bps in June 2013

Interest rate on credit cards was reduced from 28% to 24% in May 2013

A maximum cap of 2-3% on penal interest rate was imposed for delayedpayments

5


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9

10

11

12

13

14

15

16

17

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13

AWPR AWLR

In 1H2013, CBSLs monetary easing led to a254bps decline in AWPLR

6

Figure 1: AWLR and AWPR Jan-Aug 2013

Source: CBSL

Statutory Reserve Ratio wascut by 200bps in June 2013

Policy rates were cutby 50bps in May 2013


7/51

Deposit rates followed a similar trend decliningc.280bps YTD

7

13.5% 13.5%14.0%

13.0%

14.0% 14.0%14.5%

15.0%

10.5% 10.5% 10.5% 11.0% 11.0% 11.0%11.5%

12.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

COMB SAMP NTB NDB HNB SEYB PABC UBC

1-yr FD rate Jan 2013 1-yr FD rates Aug 2013

Figure 2: 1-yr fixed deposit rate changes - YTD

Avg. 13.9%

Avg. 11.1%

Source: Bank websites


8/51

However, loan growth continues to remainsubdued (avg. of 6.5% YTD)

8

Figure 3: Loan growth Jan to Jun 2013

Source: Bank quarterly reports

21.4%

11.7%

7.1%

5.0% 4.6% 4.6% 4.5%

1.1%

0%

5%

10%

15%

20%

25%

UBC SAMP HNB NTB SEYB NDB COMB PABC

Avg. loan growth 6.5% (Jan- June 2013)

Banks with heavy exposure to the corporate sector

witnessed lower loan book growth in 1H2013


9/51

as economic conditions remain sluggish

9

1.8

1.57

1.5

1.6

1.6

1.7

1.7

1.8

1.8

1.9

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13

Figure 7: Perceived Economic Opportunity IndexFigure 6: Industrial Production Index

Figure 4: External Trade Jan-Jun 2013

3,500

4,500

5,500

6,500

7,500

8,500

9,50010,500

Exports USD mn Imports USD mn

USDmn

Jan-Jun 2012 Jan-Jun 2013

-4.5%

-5.8%

112.3

109.2

90

95

100

105

110

115

120

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13

2010=100

Figure 5: Nielson Business Confidence Index

135129

100

110

120

130

140

150

160

170

Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13

BCI

Source: CBSL, LMD & FEF


10/51

Private sector credit yet to pick up despite the ratecut (+4.4% Jan-Jul 2013 vs. +13.2% Jan-Jul 2012)

10

22%

19%

22% 21%20%

24%

32%

15%

13%

11% 10%9.3% 8.9% 8.4%

0%

5%

10%

15%

20%

25%

30%

35%

Total credit to public sector growth (YoY)

Credit to the Private Sector growth (YoY)

Figure 8: Private Sector vs. Public SectorCredit YoY Growth

Source: CBSL & CAL Research

13.2%

4.4%

2012 2013

Credit to the Private Sector growth (YoY)

Figure 9: Private Sector Credit Growth(Jan-Jul)


11/51

CAL revises private sector credit growthdownwards to 12% for 2013E (previous 16%)

11

LKR2.36tn

LKR2.64tn

2012 2013E

Figure 10: CALs private sector credit growth estimate

Source: CBSL & CAL Research

* Private sector credit includes government commercial banks, private local banks and foreign commercial banks* CAL expects marginal recovery in credit growth in 2H2013


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II. CORE BANKING PROFITS CONTINUETO REMAIN ROBUST

12


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II. Core banking profits continue to remainrobust

In 1H2013, deposit growth outpaced loan growth for most banks (avg. of 8.7%vs. 6.5%)

Slower loan book growth led to excess funds being parked in low-yield liquidassets (avg. 25%)

Banks with growing liquid assets witnessed declines in their net interest margins(avg. NIMs 4.5%)

Moderate fee income growth augmented NII growth for most banks, despite theslowdown in external trade

Cost-to-income* improved across the board as banks slowed down branchexpansion (avg -300bps)

Core profitability remains robust for mainstream banks (avg. 24%)

13


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15.4%

13.0%

9.4% 9.2%

6.8%6.5%

6.1%

3.0%

UBC SAMP HNB NTB SEYB NDB COMB PABC

In 1H2013, deposit growth outpaced loangrowth for most banks (avg. of 8.7% vs. 6.5%)

14

Figure 11: Deposit growth in 1H2013

Avg. Deposit growth 8.7% (Jan- Jun 2013)



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Slower loan book growth led to excess funds beingparked in low-yield liquid assets (avg. 25%)

15

25.4%

22.0%

25.9%

21.5% 21.0% 21.5% 21.8% 21.6%

32.6%

27.7%

25.4%24.4% 23.8%

22.5% 22.2%

20.7%

0%

5%

10%

15%

20%

25%

30%

35%

COMB NDB NTB SYEB PABC SAMP HNB UBC

2012 1H2013

Avg. 25%

Figure 12: Statutory liquid assets of banks - 2012 vs. 1H2013



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Significant reduction inlending rates to boostloan growth led to thedecline in NIMs

52

19

8 8

-35 -37

-69-77

-100

-80

-60

-40

-20

0

20

40

60

NTB NDB HNB SAMP COMB PABC SEYB UBC

Bpschange

Imposition of minimum lendingrates to improve yield on assetscompared to other banks led toa marginal improvement in NIMsdespite increasing liquid assets

Banks with growing liquid assets witnessed declines intheir net interest margins (avg. NIMs 4.5%)

16

Figure 13: NIMs for 1H2013 Figure 14: Bps change in NIMs (Jan- Jun 2013)


Repricing of A&L., reduction in liquidassets and an improving CASA baseassisted the improvement in NIMs

5.5% 5.4%

4.5% 4.5%4.3% 4.3%

4.0%3.5%

NTB HNB COMB SEYB PABC SAMP NDB UBC

Avg. 4.5%

Figure 16: Bps change in liquid assets (Jan- Jun 2013)

723

570

284 284

9938

-47 -91-200

0

200

400

600

800

COMB NDB PABC SEYB SAMP HNB NTB UBC

Bpschange

Figure 15: Net interest income growth 1H2013 YoY

32%

27% 26%23%

17%

6%

-3%

-7%

NTB SAMP NDB HNB PABC COMB SEYB UBC


17/51

Moderate fee income growth augmented NII growthfor most banks, despite the slowdown in external trade

17

Figure 17: 1H2013 Fee income growth YoY & Fee income as % of net income

56%

28%

20% 20%

16%

13%

10%

1%

17%

22%

20%

32%

18%16%

15%

22%

0%

5%

10%

15%

20%

25%

30%

35%

0%

10%

20%

30%

40%

50%

60%

UBC SEYB NDB NTB SAMP COMB HNB PABC

Feeincomeasa

%ofnetinterestincome

1H2013g

rowthinfeeincomeYoY

Growth in fee based income Fee income as a % of net interest income

Banks recognized higher fee income mainlystemming from the card business and higherbank charges



18/51

51%

59%

70%

67% 66%

72%69%

82%

50%56%

62% 63%64% 68%

70%

103%

COMB NTB SAMP HNB NDB PABC SEYB UBC

1H2012 1H2013

Cost-to-income* improved across the board as banksslowed down branch expansion (avg -300bps)

18* Cost-to-income = Non operating income/(Net Interest Income + Fee based income)

Figure 18: Cost-to-income ratio* of banks 1H2012 vs. 1H2013



19/51

Core profitability remains robust for mainstream banks(avg. 24%)

19

Figure 19: 1H2013 Core profit* growth YoY

60%

37% 35% 33% 32%

9%

-3%

-114%

SAMP NTB HNB NDB PABC COMB SEYB UBC

PABCs core profit growth mainly

comes from the reduction in cost-to-

income ratio from 72% to 68%


Avg. 24%

UBCs core profits dipped 114% YoY asnet interest income declined 7% YoY

and operating expenses rose 24% YoY


20/51

III. MACRO CHANGES CHALLENGECREDIT QUALITY & NET EARNINGS

20


21/51

III. Macro changes challenge credit quality andnet earnings

Overall net earnings were down for 1H2013 due to higher impairment charges andtrading losses

NPLs across the board shot up with the slowdown in economic activity (avg. +72bps)

Substantial rise in impairment charges hurt bottom-line, especially for banks withgreater exposure to gold loans

as gold prices tumbled 26% Jan-Jun 2013

Net earnings deteriorated further on reduction in trading income resulting fromreduced forex gains

However, capital adequacy still remains above minimum requirement (avg. 15%)

Leverage ratios of SL banks also are at comfortable levels compared to global banks

Attractive relative valuation multiples for SL banking stocks (avg. PER 8.7x; avg. PBV1.1x)

Banking sector stocks dividend yield avg. 5.5%

21


22/51

Overall net earnings were down for 1H2013 due tohigher impairment charges and trading losses

22

Figure 20: Net profit growth for the 1H2013 YoY

Source: Bank uarterl re orts

15%

5%3%

-2%

-11%-13%

-39%

-55%

HNB NTB SEYB NDB UBC COMB SAMP PABC

Higher impairment charges were offset by

the LKR1.5bn reversal of overprovisioning

for Employee Share Benefit Scheme

NDBs earnings declined 2% YoY due to

higher VAT charges & reduction in

trading and associate profits

COMBs net earnings declined 13% YoY due to a

one-off LKR 2.5bn forex translation gain recorded

in 1H2012 which resulted from the 14% LKR

depreciation (Jan-Jun 2012)

An LKR 1.7bn impairment charge and a one-off

LKR1.4bn forex gain last year resulted in 1H2013

net earnings declining 39% YoY, despite a 60%

YoY 1H2013 core profit growth

A trading loss of LKR243mn in 1H2013 vs. a

trading gain of LKR210mn in 1H2012 due to

the inclusion & revaluation of swap costs

resulted in the reduction in profitability

An LKR399mn impairment was recognized in

1H2013 vs. a LKR114mn reversal in 1H2012 to

compensate for the rising NPLs


23/51

NPLs across the board shot up with theslowdown in economic activity (avg. +72bps)

23

Figure 21: Gross Non Performing Advances

ratio as at 30th Jun 2013

Figure 22: Basis points increase in Gross NPL's

(2012 to 1H2013)


365

11489

6754 46

25

-184

-300

-200

-100

0

100

200

300

400

PABC NTB HNB COMB NDB SAMP UBC SEYB

Bps

NPLs declined 180bps due

to the higher NPL base of

SEYB

Avg. 72bps

11.2%

7.8%

5.7%4.6%

4.0% 4.0%

2.5%1.9%

SEYB PABC UBC HNB COMB NTB SAMP NDB

Avg. 4.7%


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Substantial rise in impairment charges hurt bottom-line,especially for banks with greater exposure to gold loans

24

Figure 23: Impairment charge & banks exposure to gold loans

25%

16%16%

13%

11%

4%

3%

3%

0%

5%

10%

15%

20%

25%

30%

-500

0

500

1,000

1,500

2,000

2,500

3,000

SAMP PABC HNB SEYB UBC NDB COMB NTB

%exp

osuretogoldloans-2012

Impa

irmentcharge-LKRmn

Impairment charge 1H2012 Impairment charge 1H2013 Exposure to gold loans

Source: Bank annual & quarterly reports


25/51

as gold prices tumbled 26% Jan-Jun 2013

25

Figure 24: Global gold spot prices YTD

1,676

1,235

1,367

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

January-13 February-13 March-13 April-13 May-13 June-13 July-13 August-13 September-13

USD/Oz

Banks have now reduced their LTVs on gold loans toc.60-65% from their previous 80-85% to be cautious onfurther gold price reduction.

Source: Bloomberg

Banks with higher exposure to pawning advancesrecognized significant impairment charges as the 26%reduction in gold prices led to collateral value of goldloans falling below loan value


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Net earnings deteriorated further on reduction intrading income resulting from reduced forex gains

26

Figure 25: Net trading income/(losses) in 1H2012

vs. 1H2013

-6%

-5%

2%

-5%

8%

-5%

4%

6%

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

HNB COMB SAMP NTB NDB SEYB PABC UBC

Trading income 1H2012

Trading income 1H2013

Trading income as a % of net operating income

105

110

115

120

125

130

135

140

LKR/USD

+2% LKR

depreciation

Figure 26: LKR exchange rate movement

2012 to Sep 2013

One-off forex gains in 1H2012 stemming from the 16%

LKR depreciation (Jan-Jun 2012) and recognition of

currency swap costs (1H2013) under trading income

resulted in a decline in trading income

Source: Bank quarterly reports & CBSL

LKRmn


27/51

However, capital adequacy still remains aboveminimum requirement (avg. 15%)

27

Figure 27: Tier 2 capital ratio of banks 2012 vs. 1H2013

20.7%

13.9%

20.3%

16.9%

14.4%

17.3%

15.8%

13.8%

18.3%17.8%

16.0% 15.9%15.2% 14.9%

12.7% 12.6%

0%

5%

10%

15%

20%

25%

NDB COMB UBC HNB SYEB NTB PABC SAMP

Tier 2 as at 31st Dec 2012 Tier 2 as at 30th Jun 2013

Source: Bank quarterly reports & CBSL

Min. requirement 10%


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Leverage ratios of SL banks also are atcomfortable levels

28

Figure 28: Leverage ratio of SL banks (Assets/ Equity)

6.9x7.5x

9.0x

9.5x10.0x

12.1x12.5x

15.4x

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

UBC NDB HNB SEYB COMB NTB SAMP PABC

Leverageratio(Assets/Equity)

Leverage ratio as at 31st Dec 2012 Leverage ratio as at 30th June 2013

Avg. 10.4x


29/51

...compared to global banks

29

Figure 29: Leverage ratios of a few global banks (Assets/Equity)

10.4x9.3x 9.0x

9.6x

11.6x

20.2x

18.6x

14.7x

11.3x

9.8x 9.6x

14.3x

0

5

10

15

20

25

Sri Lanka Bank of

america

Wells

Fargo &

Co

Bank Of

New York

Mellon

Corp

JPMorgan

Chase &

Co

Bnp

Paribas

Royal

Bank Of

Scotland

Group

HSBC

Holdings

Malayan

Bank

DBS

Group

ICICI Bank Punjab

National

Bank

Assets/Equity

Avg. 12.5x


30/51

Attractive relative valuation multiples for SLbanking stocks (avg. PER 8.7x; avg. PBV 1.1x)

30

Figure 30: Trailing 12 months and Forward 2013E PER

Figure 31: P/BV based on net assets values as at 31 June 2013 and December 2013E

Source: Bank quarterly reports & CAL Research

0.5x

0.8x0.9x 1.0x 1.0x

1.1x 1.1x1.2x

1.3x

1.3x

1.7x

0.8x

0.9x 1.0x1.0x

1.1x1.3x

1.6x

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

SEYB.X HNB.X SEYB UBC NDB SAMP HNB PABC NTB COMB.X COMB

PBV-2013E

PBV

PBV Jun 2013- (LHS) PBV -2013E - (RHS)

5.0x 5.3x6.7x 7.2x 7.4x 7.7x 7.8x 8.1x

9.5x 10.5x

24.9x

4.5x6.0x 6.2x 6.5x

7.3x 7.6x

9.9x

-

2

4

6

8

10

12

-

5

10

15

20

25

30

SEYB.X HNB.X NTB HNB SAMP PABC NDB COMB.X SEYB COMB UBC

ForwardPER-2013E

Trailing12MP

ER(x)

Trailing PER - (LHS) Forward PER - 2013E (RHS)


31/51

Banking sector stocks dividend yield avg. 5.5%

31

Figure 32: Dividend yield for banks 2012 and 2013E

Source: Bank quarterly reports & CAL Research

7.8%

7.3%

6.7% 6.5%6.3% 5.7% 5.6%

5.6%

3.6%3.5%

1.0%

9.1%

7.1%

5.7%

6.6%

5.4% 5.5%

4.3%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

HNB.X COMB.X SEYB.X SAMP PABC HNB COMB NDB NTB SEYB UBC

D

ividendYield-2013E

Dividendyield-2012

Dividend yield - (LHS) Dividend Yield -2013E - (RHS)


32/51

IV. CALs top 5 picks to avg. 36.4% vs.our coverage universe avg. of 30.2%

32


33/51

CALs top 5 picks to avg. 36.4% vs. ourcoverage universe avg. of 30.2%

33

BankRecomm

endation

Current

Price

Previous

target

price

Target

Price

Price

upside

2013E

ROE

2013E

ROA

Core

profit

growth

2013E

Net

profit

growth

2013E

PBV

2013E(x)

PER

2013E (x)

Dividend

yield

2013E

Total

Return

Hatton National Bank - Non Voting Buy 109 149 151 38% 17.3% 1.9% 32% 16% 1.0 4.5 6.8% 45.2%

Nations Trust Bank Buy 56 79 78 39% 20.4% 1.72% 31% 14% 1.2 6.1 4.3% 43.6%

Hatton National Bank - Voting Buy 149 190 190 28% 17.3% 1.9% 32% 16% 0.8 6.1 9.1% 36.7%

Sampath Bank Buy 179 224 224 25% 16.2% 1.4% 55% -14% 1.0 6.8 5.5% 30.6%

Commercial Bank - Non Voting Buy 88 112 105 20% 17.4% 2.0% 13% -3% 1.6 9.9 6.2% 26.1%

Commercial Bank - Voting Hold 114 133 125 10% 17.4% 2.0% 13% -3% 1.3 7.6 7.1% 16.9%

National Development Bank Hold 143 184 153 7% 16.7% 1.7% 23% 4% 0.9 7.3 5.5% 12.5%


34/51

Hatton National Bank [HNB.X0000] to deliver 1-year total return of +45.2%: BUYHatton National Bank (HNB V LKR 146.5 NV LKR 109; Market Cap USD421mn): HNB is the second largest private commercial bank with a loan

book of LKR 326bn (+13%YoY) and a c.23% private bank market share.

CAL expects HNBs NIMs to improve to 6.1% in 2013E from 5.8% in

2012 benefiting from declining interest rates (1-yr FD rates reduced to

11% in 2H2013 from 14% in starting 2013) and an improving CASA base

(40% in 1H2013 vs. 39% in 1H2012).

CAL estimates HNBs loan growth to be c.15% for 2013E and fee based

income to grow c.9% during the year with the introduction of new

products (hybrid S/As) which may lead to core profit growing 31% YoY

to LKR 12.7bn in 2013E. The bank will also w itness improvements in i ts

cost-to-income ratios (63% in 2012 to 55% in 2013E) as branches addedduring the last 2 years start contributing to profitability. For 1H2013,

HNBs core profits grew 31% YoY while net profits grew 15% YoY to

LKR 3.4bn.

CAL anticipates HNBs earnings to grow 16% YoY to LKR 9.4bn in

2013E which may translate into a PER of 6.1x and PBV of 0.8x at

current prices. HNB may maintain a dividend payout close to 42%

which may provide a dividend yield of 6.8% for the voting share and

9.1% yield for the non-voting share. CALs target price for HNB Voting

is LKR 190 (+30% total return) and LKR 151 (+39%) for the non-votingshare. BUY

34

FY11 FY12 FY13E FY14E

Net interest margin 5.24% 5.83% 6.11% 5.93%

Cost-to-income 69% 63% 55% 58%

Average ROE 18.1% 17.4% 17.3% 18.9%

Average ROA 1.91% 1.94% 1.94% 2.08%

Loan Growth 27.7% 18.1% 15.4% 17.2%

* Net interest income+Fee based income-Operat ing expenses

90

100

110

120

130140

Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13

Index

HNB HNB.X ASPI

Market Cap (USD): 422mn

1 Year Avg. Daily T/O (USD): 95k

1 Year Price H/L (LKR): 132.5/ 102Free Float: 80%

Current Price (LKR): 109.00

FYE Mar - LKR mn 2011 2012 2013E 2014E

Net interest income 16,920 22,444 27,173 30,465

Net interest income growth 33% 21% 12%

Core Profit* 6,207 9,699 12,669 14,856

Core Profit growth 56% 31% 17%

Profi t a ttributable to equ ity holders 6,819 8,111 9,415 11,551

Profit growth 19% 16% 23%

EPS (LKR) 17.1 20.3 24.0 29.4

NAVPS 104.2 129.4 143.7 162.6

PER (x) (Voting) 8.7 7.3 6.2 5.1

P/BV (x) (Voting) 1.4 1.2 1.0 0.9

PER (x) (Non Voting) 6.4 5.4 4.5 3.7

P/BV (x) (Non Voting) 1.0 0.8 0.8 0.7

DPS (LKR) 7.3 8.5 9.9 12.2

Dividend Yield % (Voting) 4.9% 5.7% 6.7% 8.2%

Dividend Yield % (Non Voting) 6.7% 7.8% 9.1% 11.2%


35/51

Nations Trust Bank [NTB.N0000] to deliver 1-yeartotal return of +43.6%: BUY

Nations Trust Bank (NTB V LKR 56; Market Cap USD 100mn):

NTB is one of the smaller listed private banks with a loan book

of LKR 77bn (+9% YoY) representing a market share of c.6%.NTBs deposit base stood at LKR 92bn (+13% YoY)

representing a market share of c.6.2% among private sector

banks.

CAL expects NTBs loans to grow 12% in 2013E even amidst

the subdued economic conditions prevailed in 1H2013. NTBs

higher fee based income from its growing credit card business

and bond trading to supplement relatively stable core profits.

However, NTBs cost-to-income ratios are anticipated to

remain higher (c.57%) as NTB initiates its branch expansion

program to improve its CASA base which currently stands atc.22%. NTB has opened 5 branches in 1H2013 and intends to

open 10 branches during the year.

In 1H2013, NTBs earnings were LKR 980mn (+5% YoY) and

CAL expects earnings to reach LKR 2.2bn (+14% YoY) for

2013E which translates into a PER of 5.8x and PBV of 1.1x at

current prices. CALs 2013E target price for NTB is LKR 78,

+39% from current prices and we expect a dividend yield of4.5%. BUY

35

95

100

105

110

115

120

125130


Index

NTB ASPI



1 Year Price H/L (LKR): 68.9/51.8

Free Float: 80%

Current Price (LKR): 56

2011 2012 2013E 2014E



Average ROE 20.9% 20.8% 20.4% 23.4%

Average ROA 1.74% 1.74% 1.72% 2.01%

Loan Growth 39.3% 20.0% 11.6% 20.0%

* Net inter est income+Fee based income-Operat ing ex penses

YEAR END DEC (LKR mn) 2011 2012 2013E 2014E



Core Profit* 2,093 3,118 4,088 5,145


Profi t attributable to equity holders 1,607 1,951 2,231 3,006Profit growth 21% 14% 35%

EPS (LKR) 7.0 8.5 9.7 13.0

NAVPS 37.4 43.8 50.9 60.6

PER (x) 8.0 6.6 5.8 4.3

P/BV (x) 1.5 1.3 1.1 0.9

DPS (LKR) 2.0 2.1 2.5 3.4

Dividend Yield % 3.6% 3.7% 4.5% 6.1%


36/51

Sampath Bank [SAMP.N0000] to deliver 1-yeartotal return of +30.6%: BUY

Sampath Bank (SAMP LKR 179; Market Cap USD 225mn): SAMP is

the third largest private commercial bank in Sri Lanka with a loan

book o f LKR 237bn and a c.16% private bank market share. In 2013E,SAMP is likely to maintain loan book growth at c.23%. SAMPs net

interest margins are likely to marginally improve from 4.89% in 2012

to 5% in 2013E on the back of higher low-cost foreign borrowings

raised during the year and above average CASA base (c.33% for

2013E vs. indust ry avg. o f 27% for 2012). SAMP raised USD 100mn i n

2013 which may reduce the average cost of funding by 6bps as

hedging costs are partly reduced due to assets in Bangladesh.

The cost-to-income ratio of the bank is also likely to improve on

consolidation of the branch network as the extensive branchexpansion (+80 branches from 2009) slows down. SAMPs share

price collapsed 21% from a high of LKR 240 in Feb 2013. In 1H2013,

one-time charge of LKR 989mn out of the LKR 1.6bn overall

impairment charge was provided for pawning advances (c.25% of

loan book) as global gold prices tumbled 26% (Jan-June 2013).

However, CAL has factored in a conservative USD 1100/oz. gold price

and 8% impairment rate which provides a LKR 1.2bn impairment

charge on gold loans for 2013E vs. previous LKR 356mn. However,

gold prices in the local market stands atc

. USD 1535/oz. (includes a10% import duty). CALs revised target price for SAMP is LKR 224

(+25%) with a dividend yield of 5.7% for 2013E. BUY

36




Average ROE 16.3% 21.4% 16.2% 20.7%

Average ROA 1.67% 1.89% 1.35% 1.65%

Loan Growth 34.5% 25.5% 22.6% 20.3%

* Net interest income+Fee based income-Operat ing ex penses

100

105

110

115

120

125

130

135

140


Index

SAMP ASPI



1 Year Price H/L (LKR): 242/ 178.5Free Float: 85%


FYE DEC - LKR mn FY11 2012 2013E 2014E



Core Profit* 2,975 4,622 7,150 8,894


Profit attributable to equity holders 3,683 5,343 4,609 6,749

Profit growth 45% -14% 46%

EPS (LKR) 22.1 31.9 27.5 40.2

NAVPS 136.0 162.2 180.9 208.3

PER (x) 8.1 5.6 6.5 4.4

P/BV (x) 1.3 1.1 1.0 0.9

DPS (LKR) 8.5 11.6 10.2 14.9

Dividend Yield % 4.8% 6.5% 5.7% 8.3%

C i l B k [COMB X0000] t d li 1


37/51

Commercial Bank [COMB.X0000] to deliver 1-year total return of +26%: BUYCommercial Bank (COMB V LKR 114.1, NV LKR 88; Market Cap

USD 717mn): COMB is the largest private sector commercial

bank in SL with a loan book of LKR 373bn (+19 YoY) and a

c.29% private bank market share. CAL forecasts COMBs loanbook to grow in line with industry loan growth at 17% for 2013E.

COMBs larger CASA base (c.42% for 2013E), low cost IFC loans

and foreign deposits may enable COMB to maintain NIMs at

2012 levels (c.5.4%) despite lower yields from higher liquid

assets. COMB borrowed USD75mn via a subordinated loan f rom

IFC in 2012 consequent to raising USD65mn in 2012. Benefits

from recent branch additions (2010-12) and consolidation of

bank branches will enable COMBs cost-to-income ratios to

improve to 50% in 2013E from 51% in 2012. CAL expectsCOMBs core profi tability to grow 13% to LKR 14.4bn in 2013E.

COMB also provides an attractive dividend yield of 5.4% for the

voting and 7.1% for the non voting share. COMBs size and

higher than avg. liquidity (+2.3x) makes it investible for foreigninvestors. Larger dominant banks in regional peer countries

trade at a 47% premium to their smaller counterparts which may

just ify a c.40% premium for COMB. CALs 2013E target pri ce for

COMB.X is LKR125 (+10%) and LKR105 (19%) for the non-vot ing

share. CAL recommends a HOLD on COMB.N and BUY onCOMB.X currently trades at a PER of 7.6x on 2013E and PBV of

1.3x.

37

95

100

105

110

115

120

125

130


COMB COMB.X ASPI



1 Year Price H/L (LKR): 102/ 85

Free Float: 100%

Current Price (LKR): 88.00

2011 2012 2013E 2014E



Average ROE 20.2% 20.8% 17.4% 20.1%

Average ROA 1.95% 2.11% 1.95% 1.95%

Loan Growth 26.6% 18.6% 10.8% 18.1%* Net interest income+Fee based income-Operating expenses

FYE Mar - LKR mn 2011 2012 2013E 2014E



Core Profit* 10,479 12,882 14,496 19,260


Profit attributable to equity holders 7,932 10,080 9,765 12,714


EPS (LKR) 9.3 11.9 11.5 15.0

NAVPS 52.0 62.4 69.9 79.5

PER (x) (Voting) 12.2 9.6 9.9 7.6

P/BV (x) (Voting) 2.2 1.8 1.6 1.4

PER (x) (Non Voting) 9.4 7.4 7.6 5.9

P/BV (x) (Non Voting) 1.7 1.4 1.3 1.1

DPS (LKR) 5.8 6.4 6.2 8.1

Dividend Yield % (Voting) 5.1% 5.6% 5.5% 7.1%

Dividend Yield % (Non Voting) 6.6% 7.3% 7.1% 9.2%


38/51

National Development Bank [NDB.N0000] todeliver 1-year total return of +12.5%: HOLDNational Development Bank (NDB V LKR 143; Market Cap USD

117mn): NDB is the 5th largest private sector bank with a loan book

of LKR 130bn and a c.8.4% private bank market share. The bank

commenced operations as a development bank and now functions

as a fully fledged commercial bank. NDB was able to grow its

assets by 17% in 2012. CAL expects NDBs loan book to grow

c.12% in 2013E due to the delay in obtaining the proposed low cost

USD250mn foreign loan facil ity.

In 1H2013, NDBs fee based income grew 20% YoY to LKR 690mn

while cost to-income ratio improved marginally f rom 66% in 1H2012

to 64% in 1H2013 amidst 5 branches being added YTD, leading to

core profits growing 33% YoY to LKR 1.5bn. CAL expects 2013E

core profit s to grow 23% YoY to LKR 3.7bn and recurring net prof its

to marginally grow 4% YoY to LKR3.2bn.

NDB currently trades at a 2013E PER of 7.3x and PBV of 0.9x. CAL

maintains a HOLD on NDB based on lower ROEs (13% for 2013E)

and a revised target price of LKR 153 ( +7%) which may provide a

total 1-yr return of 12.5%, including a dividend yield of 5.5%. HOLD

38

100

110

120

130

140

150

160

Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13

NDB ASPI


1 Year Avg. Daily T/O (USD): 155k1 Year Price H/L (LKR): 182.5/118.1

Free Float: 96%


FYE Mar - LKR mn 2011 2012 2013E 2014E



Core Profit* 2,845 3,043 3,749 5,189


Profi t attributable to equi ty holders 2,527 8,854 3,229 4,374


EPS (LKR) 15.4 53.9 19.7 26.6

NAVPS 103.1 151.5 153.3 169.3

PER (x) 9.3 2.6 7.3 5.4

P/BV (x) 1.4 0.9 0.9 0.8

DPS (LKR) 7.5 15.0 7.9 10.7

Dividend Yield % 5.3% 10.5% 5.5% 7.5%




Average ROE 15.7% 35.3% 12.9% 16.5%

Average ROA 2.01% 1.87% 1.71% 1.91%

Loan Growth 43.6% 17.9% 12.2% 17.4%* Net intere st income+Fee based income-Operating expe nses


39/51

Appendix : Summary Financial Statements

39


40/51

40

Hatto

nNation

alBank

-IS

Hatton National Bank - Income Statement

As at 31 December 2012 2013E 2014E

Income 55,160 68,798 80,487

Interest income 47,940 60,832 70,786

Less: Interest expenses 25,496 33,659 40,320

Net interest income 22,444 27,173 30,465Fee and commission income 3,833 4,408 5,290

Less: Fee and commission expenses 64 353 423

Net fee and commission income 3,769 4,056 4,867Net interest, fee and commission income 26,213 31,229 35,332

Net loss from trading (1,624) (1,488) (1,936)

Net gain from financial investments 114 213 213

Other operating income 4,897 4,833 6,135

Total Operating income 29,600 34,786 39,743Less: Impairment charge/(reversal) for loans and other losses (1,162) (3,037) (1,178)

Net operating income 28,438 31,749 38,565

OPERATING EXPENSES

Personnel expenses 7,104 6,361 8,671

Premises, equipment and establishment expenses 3,481 3,917 4,324

Other overhead expenses 5,929 6,782 7,481

16,514 17,060 20,476

Operating profit before value added tax (VAT) 11,924 14,689 18,089

Less: Value added tax (VAT) on financial services 1,248 1,431 1,820Operating profit after value added tax (VAT) 10,676 13,258 16,270

Share of profit/(loss) of Associates (net of income tax) 17 17 18

PROFIT BEFORE INCOME TAX 10,693 13,275 16,288

Less: Income tax expense 2,421 3,717 4,561

PROFIT FOR THE YEAR 8,271 9,558 11,727

Profit attributable to Equity holders of the Bank 8,111 9,415 11,551

Profit attributable to Non-controlling interests 160 143 176


Hatton Nat ona Ban - Statement o F nanc a Pos t on

As at 31 December 2011 2012 2013E 2014E


41/51

41

Hatto

nNation

alBank

-BS

As at 31 December 2011 2012 2013E 2014E

ASSETS

Cash and cash equivalents 7,576 8,849 16,343 8,533

Balances with central banks 18,698 19,950 25,605 30,190

Placements with banks 8,244 11,667 4,872 5,359

Derivative financial instruments 497 345 351 411

Other financial assets held for trading 2,408 1,078 2,625 2,193

Non-current assets held for sale 3 3 3 3

Loans and receivables to other customers 257,435 303,922 350,732 410,991

Financial investments - Available-for-sale 51,435 58,929 67,488 78,961

Financial investments - Held-to-maturity 1,698 1,644 1,875 2,193

Financial investments - Loans and receivables 15,362 20,904 22,496 26,320

Investments in Associates 384 386 404 422

Investment properties 169 165 160 155

Property, plant and equipment 15,416 17,815 18,285 18,881

Intangible assets 671 690 710 731

Deferred tax assets 319 372 372 372

Other assets 10,982 12,680 13,872 16,231

Total assets 391,297 459,399 526,192 601,947

LIABILITIES

Due to banks 19,885 30,401 38,799 48,212

Derivative financial instruments 618 1,436 2,551 3,319

Due to other customers 290,912 340,848 374,932 438,671

Dividends payable 170 223 277 340

Other borrowings 8,876 6,747 17,537 9,042

Debt securities issued - 150 150 150

Current tax liabilities 1,094 1,840 2,230 2,736

Bills payable 1,404 1,431 1,431 1,431

Subordinated debentures 4,989 4,563 8,813 8,813

Insurance provision - Life 3,021 3,626 4,170 4,796

Insurance provision - General 944 969 1,018 1,069

Deferred tax liabilities 1,225 1,556 1,556 1,556

Other provisions 5,877 4,400 5,261 6,165Other liabilities 9,924 8,614 9,045 9,497

Total Liabilities 348,940 406,805 467,770 535,796

EQUITY

Stated capital 11,451 12,579 12,579 12,579

Statutory reserves 2,778 4,531 4,719 4,950

Retained earnings 3,504 5,322 8,429 12,818

Other reserves 23,841 29,193 31,582 34,514

Total equity attributable to equity holders of the Bank 41,575 51,624 57,309 64,862

Non-controlling interests 782 969 1,113 1,289

Total Equity 42,357 52,594 58,422 66,150

Total Liabilities and Equity 391,297 459,399 526,192 601,947

NAVPS 104.2 129.4 143.7 162.6


42/51

42

Natio

nsTrust

Bank-IS

As at 31 December 2011 2012 2013E 2014E

Income

Interest Income 9,795 15,113 18,574 21,560

Interest Expense (5,391) (9,358) (11,587) (13,143)

Net Interest Income 4,404 5,755 6,987 8,417

Fees and Commission Income 1,850 2,285 2,794 3,363

Fees and Commission Expense (144) (163) (210) (252)

Net Fees and Commission Income 1,706 2,122 2,584 3,111

Net Trading Income 72 288 (262) (174)

Other Operating Income 312 228 277 333

Total Operating Income 6,494 8,392 9,586 11,687

Net Operating Income 6,728 7,960 9,092 11,224

Personnel Expenses 1,901 2,097 2,608 3,276

Depreciation of Property, Plant and Equipment 230 267 292 335

Amortization of Intangible Assets 95 113 99 119

Other Operating Expenses 1,791 2,283 2,484 2,654

Total Operating Expenses 4,017 4,759 5,484 6,383

Operating Profit Before Value Added Tax (VAT) 2,712 3,202 3,608 4,840

Value Added Tax (VAT) on Financial Services 376 435 510 666

Profit Before Income Tax 2,336 2,766 3,098 4,175

Income Tax Expense 729 815 868 1,169

Profit for the Year 1,607 1,951 2,231 3,006

EPS 6.97 8.46 9.67 13.03


43/51

43

Natio

nsTrust

Bank-B

S

As at 31 December 2010 2011 2012 2013E 2014E

Assets

Cash and Cash Equivalents 1,533 3,694 2,534 2,134 2,200

Balances with Central Bank of Sri Lanka 2,416 4,284 5,089 5,251 6,302

Reverse Repurchase Agreements 3,484 6,614 2,712 2,896 3,475

Derivative Financial Instruments 62 255 328 369 443

Financial Assets - Held for Trading 16,033 6,550 21,088 24,133 27,801

Financial Assets - Held to Maturity 8,242 11,818 10,238 11,584 13,901Other Financial Assets 3,140 2,898 1,893 2,896 2,317

Loans and Advances to Customers 43,938 61,188 73,424 81,959 98,351

Other Assets 1,858 2,280 2,591 2,951 3,541

Property, Plant and Equipment 1,788 1,891 1,908 2,082 2,266

Intangible Assets 679 600 642 773 999

Total Assets 83,174 102,073 122,447 137,028 161,596

Liabilities

Due to Banks 1,202 1,277 2,796 3,020 3,262

Repurchase Agreements 17,391 14,480 11,833 13,113 15,736

Derivative Financial Instruments 360 316 528 592 663

Due to Customers 49,025 67,633 86,190 96,533 115,839

Debt Issued and Other Borrowed Funds 4,065 5,409 6,334 7,213 7,099

Current Tax Liabilities 583 235 544 607 744

Other Liabilities 3,788 3,859 3,846 3,923 4,001

Deferred Tax Liabilities 13 236 280 280 280

76,426 93,444 112,352 125,282 147,625

Equity Attributable to Equity Holders of the Parent

Stated Capital 4,368 5,101 5,101 5,101 5,101

Statutory Reserve Fund 156 224 314 416 555

Retained Earnings 2,225 3,034 4,044 5,191 6,736

Other Reserves - 269 636 1,037 1,579

6,749 8,628 10,095 11,746 13,970

Total Liabi li ties and Equity 83,174 102,073 122,447 137,028 161,596

NAVPS 29.3 37.4 43.8 50.9 60.6

Sampath Bank - Income Statement


44/51

44

Samp

athBank

-IS


Income 39,725 48,667 56,647

Interest income 32,712 43,190 50,607


Net interest incom e 12,039 15,179 17,771Fee and commission income 2,877 3,337 3,604

Less: Fee and commission expenses 675 751 793

Net fee and commission income 2,202 2,586 2,811

Net interest , fee and com m ission incom e 14,241 17,765 20,582Net loss from trading 6 343 320


T otal Operating incom e 18,377 20,249 23,338Less: Impairment charge/(reversal) for loans and other losses (152) (2,020) (819)

Less: Impairment gain / ( loss) on financial investments 72 0 0


OPERATING EXPENSES


Depreciation of property & equipment 588 615 629

Amortisation of intangible assets 47 56 64

Other operating expenses 4,654 5,168 5,739

Other Operating Expenses 9,619 10,616 11,688


Less: Value added tax (VAT) on financial services 1,161 1,115 1,448




Profit attributable to Equity holders of the Bank 5,343 4,609 6,749

Profit attributable to Non-controlling interests 3 5 7


Sampath Bank - Statement of Financial Position

31 b 2011 2012 2013 201


45/51

45

Samp

athBank

-BS

As at 31 December 2011 2012 2013E 2014E

ASSETS


Balances with Central Bank of Sri Lanka 13,232 17,201 15,765 18,601

Placements with Banks 5,337 8,788 9,843 11,024

Reverse repurchase agreements 4,606 3,300 4,084 4,819


Financial investments held -for- trading 23,053 35,181 36,535 43,983

Financial assets held-for-trading pledged as collaterals 4,003 2,856 4,376 5,163

Loans and receivables from banks 442 816 729 861Loans and receivables from other customers 171,977 212,480 260,966 314,166

Other loans & receivables 5,736 10,224 12,252 14,457

Financial investments- available- for- sale 2,025 1,924 2,088 3,142

Financial investments- held - to- maturity 19 10 15 18

Property and equipment 6,691 6,764 6,397 6,114


Deferred tax asset 2 12 12 12

Other assets 2,847 3,731 4,104 4,514

Total assets 250,995 314,326 375,951 442,972

LIABILITIESDue to banks 1,176 668 875 1,033

Securities sold under re-purchase agreements 4,101 2,751 3,654 4,398



Debt issued and other borrowed funds 21,490 32,218 40,839 48,190

Unclaimed dividend 37 49 43 62


Deferred tax liabilities 396 431 431 431

Provisions 138 180 199 219

Other liabilities 3,503 4,247 4,884 5,617

Total Liabilities 228,128 287,051 345,537 407,962

EQUITY

Stated capital 2,744 3,564 4,458 4,458

Statutory / risk reserve funds 858 1,199 1,429 1,767

Revaluation reserve 2,879 2,876 2,876 2,876

Available-for-sale reserve 1,798 1,465 1,465 1,465

Revenue reserves 14,529 18,110 20,120 24,372

Total equity attributable to equity holders of the Bank 22,807 27,214 30,348 34,938

Non-controlling interests 60 61 66 73

Total Equity 22,867 27,275 30,414 35,011

Total Liabilities and Equity 250,995 314,326 375,951 442,972

NAVPS 136 162 181 208

Commercial Bank - Income Statement


46/51

46

Comm

ercialB

ank-IS


Income 63,374 71,809 83,677

Interest income 52,663 62,517 73,308


Net interest income 22,852 25,004 30,565Fee and commission income 4,147 4,769 5,484

Less: Fee and commission expenses 549 668 768Net fee and commission income 3,598 4,101 4,716

Net interest, fee and commission income 26,450 29,105 35,282Net loss from trading 2,494 1,383- 1,556-

Net gain from financial investments 32 30 30


Total Operating income 33,014 32,274 38,640Less: Impairment charge/(reversal) for loans and o 3,158 2,152 2,565

Less: Impairment gain / ( loss) on financial investm - - -



Other operating expenses 5,731 6,058 6,539

13,568 14,609 16,022


Less: Value added tax (VAT) on financial services 1,987 1,949 2,392

Operating profit after value added tax (VAT) 14,301 13,564 17,661

Share of profit/(loss) of Associates (net of income 12 14 16




Profit attributable to Equity holders of the bank 10,080 9,765 12,714

Non-controlling interest 1 1 2


EPS 11.9 11.5 15.0

Commercial Bank - Statement of Financial Position


47/51

47

Comm

ercialB

ank-BS

As at 31 December 2011 2012 2013E 2014E

ASSETS


Balances with Central Banks 17,343 18,168 19,199 21,216

Placements with banks 11,674 16,163 6,465 7,112

Derivative financial instruments 40 1,351 1,446 1,707

Other financial assets held for trading 6,418 6,041 7,912 7,785

Loans and receivables to banks 580 629 629 629

Loans and receivables to other customers 314,327 372,857 413,205 487,835

Financial investments - Available-for-sale 61,415 57,963 87,916 103,795

Investments in associates 120 94 104 114

Property, plant & equipment 8,503 8,947 8,297 7,635


Leasehold property 113 112 110 109

Deferred tax assets 364 458 458 458

Other assets 7,290 9,179 9,671 9,671

Total assets 441,598 512,221 573,804 672,508

LIABILITIES

Due to banks 11,574 4,764 5,327 5,959Derivative financial instruments 435 84 93 110


Other borrowings 49,455 47,566 52,986 60,823


Deferred tax liabilities 1,640 1,890 1,890 1,890

Other provisions 1 2 2 2

Other liabilities 8,214 10,417 11,570 13,659

Subordinated term debts 1,106 1,106 1,109 1,109

Total liabilities 397,429 459,220 514,457 604,998

EQUITY

Stated capital 16,474 18,009 19,791 22,093

Statutory reserves 2,890 3,433 3,962 4,637

Retained earnings 2,588 4,173 4,661 5,297

Other reserves 22,187 27,353 30,899 35,448

Total equity to equity owners of the Bank 44,139 52,968 59,313 67,475

Non-Controlling Interest 30 32 33 35

Total equity 44,169 53,001 59,347 67,511

441,598 512,221 573,804 672,508

NAVPS 52.0 62.4 69.9 79.5

S As at 31 December 2011 2012 2013E 2014E


48/51

48

NationalDevel

opmentBank-IS As at 31 December 2011 2012 2013E 2014E

Income

Interest income 11,655 17,150 22,290 27,024

Interest expense (6,745) (11,254) (15,084) (17,858)


Net fee and commission income 1,916 1,644 1,966 2,369

Net trading income/(expense) 448 1,272 1,172 1,312Other operating income 648 6,127 1,258 1,504

Total operating income 7,922 14,938 11,601 14,352

Impairment charge/ (reversal) for loans and other losses (88) 51 249 385

Net operating income 8,010 14,887 11,352 13,967

Less: Operati ng Expenses

Personnel expenses 2,118 2,333 2,809 3,225

Depreciation of property, plant & equipment 199 205 242 279

Amortisation of intangible assets 51 96 112 145

Other operating expenses 1,613 1,862 2,260 2,698

Total operating expenses 3,981 4,496 5,423 6,347

Operating profit before value added tax 4,030 10,391 5,929 7,620

Value Added Tax (VAT) on financial services (505) (622) (1,104) (1,084)

Operating profit after value added tax 3,525 9,769 4,825 6,535

Share of associate companies profit 331 439 21 28

Profit before tax 3,855 10,207 4,846 6,563

Income tax expense (1,093) (1,275) (1,551) (2,100)

Profit for the year 2,763 8,932 3,295 4,463

Profit attributable to equity holders of the parent 2,527 8,854 3,229 4,374

Profit attributable to minority interest 235 78 66 89

Profit for the year 2,763 8,932 3,295 4,463

EPS 15.4 53.9 19.7 26.6

SAs a t 31 Decem be r 2010 2011 2012 2013E 2014E

ASSETS


49/51

49

NationalDevelopmentB

ank-BS ASSETSCash and cash equivalents 2,508 2,519 3,635 2,281 2,623

Balances with Central Bank 3,077 4,614 6,075 6,321 7,356

Placements with banks - 518 3,559 7,383 11,898

S ecurities purchased under resale agreements 2,155 912 3,325 4,252 6,852

Financial assets held for trading 8,187 7,106 983 7,825 12,611

Derivative financial instruments 141 1,402 1,706 3,802 2,915

Other financial assets held for trading 1,852 2,087 10,412 5,236 8,438

Loans and advances to banks 1,817 1,640 1,183 1,267 1,457

Loans and advances to customers 65,045 93,166 109,649 121,778 142,626

Lease rentals receivables 2,412 4,650 6,390 8,444 10,234

Other financial assets classified as loans and receivable 9,179 2,563 3,764 8,867 14,290

Financial assets - held to maturity 7,680 15,666 19,223 18,498 29,812

Financial assets - available for sale 7 186 174 526 847

Investments in associate companies 1,763 1,797 33 55 55

Other assets 691 963 1,155 1,774 2,040

Intangible assets 210 318 319 356 421

Property, plant & equipment 708 1,185 1,223 1,328 1,495

Investment properties 1,200 1,296 1,296 1,296 1,296

Total assets 108,635 142,588 174,103 201,287 257,267

LIABILITIES

Due to Banks 570 5,924 2,320 6,943 7,932

S ecurities sold under repurchase agreements 11,475 10,133 12,516 17,049 19,968

Derivative financial instruments - 1,022 1,737 1,827 2,139

Due to customers 60,533 82,094 107,394 126,725 145,733

Debt securities issued and other borrowed funds 13,961 19,466 17,802 15,402 44,682

Tax liabilities 573 356 634 775 1,050

Other liabilities 2,825 3,286 3,657 4,140 4,849

Subordinated term debts 2,625 2,428 2,255 2,303 2,111

Deferred Tax 60 41 79 79 79

Total l iabi l i ties 92,622 124,750 148,394 175,243 228,545

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT

Stated capital 864 864 864 864 864

Statutory reserve fund 879 879 879 879 879

Investment Fund - 387 924 1,332 1,854

Retained Earnings 13,553 14,796 22,216 22,104 24,206

15,295 16,925 24,883 25,179 27,803

Non-controlling interests 717 913 826 866 920

Total Equity 16,012 17,838 25,709 26,045 28,722

Total l iabi l i ties and total equity 108,635 142,588 174,103 201,287 257,267

NAVPS 93.1 103.1 151.5 153.3 169.3


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Contacts

Research TeamTel No: +94 11 231 7777 (General)Email : [email protected]

Head of ResearchPurasisi J inadasa

Tel No: +94 11 231 7786Email: [email protected]

Udeeshan J onasTel No: +94 11 231 7746

Email : [email protected]

Reshan WediwardanaTel No: +94 11 231 7777 (Ext: 7814)Email : [email protected]

Dushan De SilvaEmail: [email protected]

Thushani De SilvaEmail: [email protected]

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