- Net profit increased 50.6%YoY to LKR 598mn in 1Q2010 compared to LKR 397.4mn in 1Q2009. This increase was mainly due to the expenses falling at a faster rate than the fall in income of SAMP.
- Forecast 2010 net profit is LKR 2,393.8 mn (up 15.5% YoY). With interest rates stabilizing (3 month Treasury Bill rates having fallen from 20.6% last year to 8.26%) the banking sector outlook remains positive with loan growth expected to continue the momentum in FY2010 due to the post war growth potential in the industry. SAMP's net interest margin is expected to be intact at around 5.3%, whilst continuing to benefit from the wider reach facilitated by the current 143 branches and new branches expected to open this year. Therefore a 15% YoY increase to LKR 2,393.8mn is likely for FY2010E and 14% YoY increase to LKR 2,736mn for FY2011E.
- Share offers good value on 8.86X forecast 2010 net profit. The share is attractive where the share is trading at 8.86X forecast 2010 net profit, 7.76X projected 2011net profit earnings. PBV is at 1.32X forecast 2010 net profit and 1.13X forecast 2011 net profit.
Interest income reduced by 9.6% YoY during 1Q2010. This was due to a 13.7% YoY decrease in interest income from loans and advances to LKR 3,570.9mn. The loan book grew by 4.6% during the quarter due to interest rates falling. Interest income on other interest earning assets increased 4.8% to LKR 1,231mn YoY. Overall for 1Q2010, income reduced 10.3% YoY to LKR 5,480.3mn.
Interest expenses dropped by 28.4% in 1Q10 to LKR 2,561.2mn compared to 1Q09 of LKR 3,577.8mn. Interest expenses on deposits dropped 22% YoY, while interest expenses on other interest bearing liabilities dropped 57.9% YoY. Total deposits increased 5.4% during the quarter to LKR 132.8Bn from 126Bn in Dec2009.
Interest income has reduced 9.6% YoY during 1Q2010. Interest income reduced by 9.6% YoY during 1Q2010. This was due to a 13.7% YoY decrease in interest income from loans and advances to LKR 3,570.9mn. The loan book grew by 4.6% YoY during the quarter due to decreasing interest rates. Interest income on other interest earning assets increased 4.8% YoY to LKR 1,231mn. Overall for 1Q2010, income reduced 10.3% YoY to LKR 5,480.3mn.
Interest expenses have dropped 28.4% YoY. Interest expenses dropped by 28.4% YoY in 1Q10 to LKR 2,561.2mn compared to 1Q09 of LKR 3,577.8mn. Interest expenses on deposits dropped 22% YoY, while interest expenses on other interest bearing liabilities dropped 57.9% YoY. Total deposits increased 5.4% during the quarter to LKR 132.8Bn from 126Bn in Dec2009.
Net interest income has increased 29.4% YoY to LKR 2,240.7mn. During 1Q2010, despite interest income dropping 9.62% QoQ, interest costs dropped at a sharper pace of 28.4% which resulted in the 29.4% increase in net interest income.
Non interest income dropped 14.8%YoY. Non interest income dropped 14.8%YoY due to Foreign exchange income dropping 55.1% YoY in 1Q2010. However a 11% increase was recorded from other income.
Non interest expenses increased 17.2%YoY. Non interest expenses increased 17.2% YoY from LKR 1,272.5mn in 1Q2009 to LKR 1,490.9mn YoY in 1Q2010. This was mainly due to personnel costs increasing 20.5% to LKR 664.2mn from LKR 551mn YoY in 1Q2010.
Net interest margin increased to 5.59%. Net interest margin increased to 5.59% in 1Q2010 compared to 5.07% in 1Q2009. This helped the bank increase its profitability during the quarter.
Provisions have increased 121.8% YoY in 1Q2010. Provisions have increased 121.8% YoY in 1Q2010 to LKR 303.8mn. General provisions recorded a 100% YoY increase to record LKR 14.5mn. Specific provisions too have increased by 164.4% YoY to LKR 713.7mn. However recoveries have increased drastically during 1Q2010 by 219.1% YoY to LKR 424.5mn.
Operating profit has risen 21.7% YoY. Operating profit rose 21.7% YoY during 1Q2010 to LKR 1,186.4mn compared to LKR 974,996mn in 1Q2009. Furthermore the cost to income ratio increased to 61.4% in 1Q2010 from 55.75% in 1Q2009.
Total tax bill reduced 6.8% YoY to LKR 581,869mn. Total tax bill has reduced 6.8% in 1Q2010 YoY to LKR 581,869mn. This is mainly due corporate tax expenditure reducing by 29.5%.however the VAT on Financial services has increased by 22.4% Net profit up 50.6% YoY to LKR 598.411mn.
Consequently Net profit increased 50.6%YoY to LKR 598mn compared to LKR 397.4mn 1Q2009. This increase was mainly due to the expenses falling at a faster rate than the fall in income of SAMP. CAR (Tier 1 - Min 5%) increased to 10.26% (Tier 2 - Min 10%) 13.43%. Tier 1 CAR reduced marginally from 10.64% as at Dec2009 to 10.26% in 1Q2010 and Tier 2 CAR reduced from 13.87% in Dec2009 to 13.43% in 1Q2010.
Forecast 2010 net profit is LKR 2,393.8 mn (up 15.5% YoY). With interest rates stabilizing (3 month Treasury Bill rates having fallen from 20.6% last year to 8.26%) the banking sector outlook remains positive with loan growth expected to continue the momentum in FY2010 due to the post war growth potential in the industry. SAMP's net interest margins is expected to be intact at around 5.3%, whilst continuing to benefit from the wider reach facilitated by the current 143 branches new branches expected to open this year. Therefore a 15% YoY increase to LKR 2,393.8mn is likely for FY2010E and 14% YoY increase to LKR 2,736mn for FY2011E.
Share offers good value on 8.86X forecast 2010 net profit. The share is attractive where the share is trading at 8.86X forecast 2010 net profit, 7.76X projected 2011net profit earnings. PBV is at 1.32X forecast 2010 net profit and 1.13X forecast 2011 net profit.
Sri Lanka Equity Analytics
World Trade Centre
Colombo, Sri Lanka
Email: info@srilankaequity.com
Web: www.srilankaequity.com
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