Investor Upd Investor Update ate 20 August 2019
Financial Financial Performance Performance 1H 2019 1H 2019
Net Operating Net Operating Income Income - Group Group 2019 2018 Growth (Rs Bn) (Rs Bn) % Interest Income 63.6 55.0 16% Interest Expenses 34.4 30.1 14% NII 29.2 24.9 17% 4.9 3% Net Fee Income 4.8 Net Insurance Premium 3.9 3.5 11% 0.02 Other Income 1.5 99% 3.8 Impairment 7.0 86% Net Operating Income 31.0 30.9 0.4% 4
Expen Expenses ses & & Profits Profits - Group Group 2019 2018 Growth (Rs Bn) (Rs Bn) % 19% 18.1 15.3 Operating Expenses Profit Before VAT & 17% 15.6 12.9 Taxes 5% 7.4 Total Taxes 7.8 PAT 38% 5.1 8.3 Profit Attributable to 37% 4.9 7.8 Shareholders 5
Net Operating Net Operating Income Income - Bank Bank 2019 2018 Growth (Rs Bn) (Rs Bn) % Interest Income 59.0 50.9 16% Interest Expenses 14% 29.0 33.1 NII 25.9 22.0 18% Net Fee Income 4.4 4.4 0.2% Other Income (0.1) 1.5 107% Impairment 6.3 3.3 87% 24.5 Net Operating Income 24.0 2% 6
Expenses Expen ses & & Profits Profits - Bank Bank 2019 2018 Growth (Rs Bn) (Rs Bn) % Operating Expenses 11.9 10.5 13% Profit Before VAT & 14.0 14% 12.0 Taxes Total Taxes 7.2 6.7 8% PAT 4.8 7.3 34% 7
Movement Movement in Group in Group Profit Profit Attribut Attributable able to to Sha Shareholders reholders Rs Bn 14 +3% +17% 0.2 +86% 12 1.1 (22%) 10 4.3 3.2 +19% 8 +5% 2.8 6 (37%) 0.4 0.2 4 7.8 (53%) 4.9 2 0 1H 2018 PAS NII Fee Income Other Provisions OpEx Taxes Minority 1H 2019 PAS 8 Income
Movement in Bank P Movement in Bank Profit After Tax rofit After Tax Rs Bn 14 +0.2% +18% 12 0.01 +87% 1.6 10 3.9 (107%) 2.9 8 +13% +8% 1.4 6 (34%) 0.6 4 7.3 4.8 2 - 9 1H 2018 PAT NII Fee Income Other Income Provisions OpEx Taxes 1H 2019 PAT
DuPont An DuPont Analys alysis is – Group Group NII 5.11% (4.83%) ROA 0.90% (1.60%) Other income ROE 1.55% (1.91%) 7.31% (12.52%) Minority Interest Impairment 0.04% (0.09%) 1.23% (0.73%) Operating Costs Leverage Multiplier 3.17% (2.97%) 8.50x (8.27x) Taxation 1.37% (1.44%) 1H 2019 1H 2018 10
DuPont Analys DuPont An alysis is – Bank Bank NII 4.79% (4.49%) ROA 0.89% (1.50%) Other income ROE 0.80% (1.21%) 8.17% (13.21%) Leverage Impairment Multiplier 1.16% (0.68%) 9.19x (8.83x) Operating Costs 2.21% (2.15%) Taxation 1H 2019 1.34% (1.36%) 1H 2018 11
Performance of Group C Performance of Group Compani ompanies es 50% 60% 51% (voting) 100% Investment Insurance Microfinance Real Estate Banking PAT- Rs 337 Mn PAT - Rs 288 Mn PAT - Rs 165 Mn PAT - Rs 140 Mn ROE – 13.9% ROE – 9.8% ROE - 7.6% ROE - 4.0% 12
Strong Strong Core Banking Core Banking Amid Cha Amid Chall llenge enges NII Growth (Rs Bn) Consistent & Superior NIM 20 7% 12.9 14.6 5.7% 6% 5.5% 5.2% 15 5.1% 5% 4% 10 3% 5 2% 1% 0 0% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Bank Group Bank Group Diversified Loan Book Balanced portfolio with 53% in higher yielding segments Retail SME & Micro 22% 31% Supported by low cost CASA of Rs 266 Bn Prudent ALM Management drives NIM despite slow loan growth Large Mid Size Corporates Corporates and rates falling late in 2Q. 43% 4%
Non Fund Income Non Fund Income Net fee Income amounts to 15% of Bank TOI Fees and Insurance income collectively contribute 23% to Group TOI Bank Fee Income Group TOI (prior to trading losses) Insurance Others Premium 2% 10% Others Cards, ATM & Remittances 18% Digital & Int'l 32% Fee Income 5% 13% Guarantees 8% NII 75% Current Accounts Trade 18% 19%
Operati Operational onal Exc Excelle ellence nce Cost to Income Bank - TOI vs. Opex (Rs Bn) 55% 70 35 CAGR 15-18 30 50% 28 60 30 TOI 20% 45% OpEx 11% 50 25 40% 40 20 35% 30 15 12 30% 11 20 10 25% 10 5 20% 15% - - 2015 2016 2017 2018 1H 2019 2015 2016 2017 2018 1H 2018 1H 2019 Bank Group Industry Bank TOI Bank Opex Group - TOI vs. Opex (Rs Bn) 80 45 CAGR 15-18 38 Group and Bank Cost to Income ratios improve by TOI 21% 40 70 35 OpEx 13% nearly 10% between 2015 and 2018 35 60 30 50 25 40 18 20 15 30 % changes in 1H OpEx exceed % changes in TOI; 15 20 lead to marginal increase in Cost/Income ratios 10 10 5 - - 2015 2016 2017 2018 1H 2018 1H 2019 Group TOI Group Opex
Asse Asset t Qualit Quality y & Credi & Credit Cost t Cost Gross NPA 10.0% Stressed operating conditions within the Agri 8.0% and Construction sectors precipitated NPA crisis. 6.0% 4.0% Proactive steps taken and and dedicated vertical 2.0% specializing in underwriting set up. 0.0% 2015 2016 2017 2018 Mar-19 May-19 Jun-19 Despite worsening of scenario post 21/4 attacks, Bank Corporate Segment SME Segment HNB has been able to curtail and bring NPA down during June. Sector wise Loans Agri, forestry & Fishing 7% Concentration risk remains low with well Construction & Wholesale & Others Infra Dev diversified loan book Retail Trade 9% 16% 20% Consumption 11% Construction & Infrastructure collectively at 16% Manufacturing only. 11% Tourism 6% Financial Healt Care & Services Support 10% 10%
Sound Capit Sound C apitali alizati zation on Capital Adequacy maintained above requirements despite higher credit costs and taxes affecting internal capital generation. Impending Debenture Issue of Rs 7 Bn to strengthen Total Capital Total Tier I Total Capital 20% 20% 18% 18% 16% 15.6% 16% 14% 13.0% 14% 14.0% 12% 12% 10% 10.0% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% 2015 2016 2017 2018 1H 2019 2015 2016 2017 2018 1H 2019 Total Tier I Minimum - DSIB Total Tier I Minimum - DSIB DSIB – Banks with assets above Rs 500 Bn
Taxes and Levies Taxes and Levies Tax Breakup – 1H 2018 28% 48% 2% 0% 17% Effective Total Tax rate of 48% in 1H 2018 on Bank Operating Profit. VAT NBT DRL Corp Tax Total Tax 10% DRL in 1H 2019 drives Total Tax Tax Breakup – 1H 2019 rate to 60% 29% 60% 10% 2% 19% VAT NBT DRL Corp Tax Total Tax
Posit Position ion Analys Analysis is Private Credit Extended by Commercial Banks (Rs Bn) Loans & Deposits (Rs Bn) 6,000 1,000 793 5,000 741 800 725 696 4,000 600 3,000 400 2,000 200 1,000 - - 2015 2016 2017 2018 1H 2018 1H 2019 2015 2016 2017 2018 1H 2019 Loans Deposits • YoY growth in loan book and deposits amount to 4.2% and 7% respectively • 3% & 1% negative growth during 1H for Loans and deposits respectively • Negative loan Growth during 1 H as Bank focusses on NIM and NPA management - Mirrors industry flat growth trend
Shar Shareholder eholder Ret Return urn 12 Month Share Movement - Rs (Aug 18/19) 250 Annualized EPS (Rs) 19.67 200 BVPS (Rs) 272.95 PBV Voting 0.49 150 PE Voting 6.84 100 Total Dividends (Rs) 8.50 50 Dividend Yield (%) 6.3 (N) & 7.0 (X) 0 Voting Non Voting 20
Than Thank k you you Investor Relations Team Hatton National Bank PLC Level 16, HNB Towers 479, T B Jayah Mawatha Colombo 10 Sri Lanka Email : investor.relations@hnb.lk Tel : +94 112 661555/1177 21
Recommend
More recommend
