Hatton National 40 net income 14.1 billion rupees, -316 year-on-year

Hatton National 40 net income 14.1 billion rupees, -316 year-on-year

HNB Posts Strong 2023 Performance Amid Economic Challenges

Hatton National Bank PLC (HNB) reported a profit after tax (PAT) of Rs. 20.35 billion for the fiscal year 2023, marking a 45.3% increase compared to Rs. 14 billion in 2022. The bank's group PAT also rose to Rs. 23.6 billion from Rs. 15.7 billion in the prior year, reflecting improved operational resilience amid global and local economic uncertainties.

The bank's interest income grew by 37.2% year-on-year (YoY) to Rs. 284.1 billion, driven by a 12.2% expansion in deposits to Rs. 1.6 trillion. However, net interest income increased modestly by 1.4% to Rs. 104.3 billion, as interest expenses surged 72.6% to Rs. 179.8 billion due to higher deposit mobilization and term deposits at elevated rates. Net fee and commission income rose 4.4% to Rs. 15.8 billion, supported by growth in credit card volumes, remittances, and digital banking adoption.

Asset quality showed signs of recovery, with the net stage 3 ratio improving to 3.76% from 4.90% in September 2023. HNB maintained a prudent impairment cover of 57.5%, including an additional Rs. 38 billion provision during the year. Total operating expenses increased to Rs. 35.5 billion, reflecting inflationary pressures, while the cost-to-income ratio rose to 29.9% from 22.0% in 2022.

The bank's effective tax rate climbed to 52.5%, influenced by a corporate tax hike from 24% to 30% and a new 2.5% social security contribution levy. HNB's asset base expanded 14.4% YoY to Rs. 1.9 trillion, with Tier 1 and Total Capital Adequacy ratios at 13.66% and 17.13%, well above regulatory minimums.

Chairman Nihal Jayawardene attributed the performance to strategic risk management and leadership under CEO Jonathan Alles, emphasizing sustainability and alignment with national economic priorities. The board proposed a final dividend of Rs. 8 per share, combining cash and scrip distributions.

HNB's 2023 results underscore its focus on balancing growth with prudence, navigating a challenging macroeconomic environment while maintaining robust liquidity and capital positions.