Backed by its resilient model which advocates prudent risk management and governance fundamentals, Amana Bank PLC continued to navigate through turbulent times, effectively, leading to its best ever performance.
The Bank recorded a Profit Before Tax (PBT) of LKR 1.21 billion for the Financial Year ending 2022. In the backdrop of Sri Lanka facing unprecedented economic challenges, the Bank’s 12% growth in PBT from LKR 1.08 billion recorded a year back, reflects its resilience, business agility and growing acceptance of its people centric unique value proposition. Tax expenses rose significantly from LKR 256 million to LKR 419 million recording a 64% increase which resulted in a Profit After Tax of LKR 788.2 million marginally lower from LKR 824.7 million in 2021.
Following the steep increase in financing rates, the Bank’s Financing Income increased substantially to reach LKR 12.1 billion in 2022 from LKR 7.7 billion recorded in 2021, denoting 58% YoY growth. Meanwhile, with Deposits being re-priced at a faster pace, financing expenses significantly rose by 115% from LKR 3.4 billion in 2021 to LKR 7.3 billion. However, strong growth in topline income enabled Amana Bank to offset this impact and record a Net Financing Income of LKR 4.8 billion in 2022, a 12% YoY increase from LKR 4.3 billion registered in 2021.
Despite the shortage in foreign exchange and import restrictions for most part of 2022, through the facilitation of imports of essential items, the Bank succeeded in growing its Net Fee and Commission Income by a commendable 87% to LKR 750.3 million as opposed to LKR 401.9 million in the previous year, while Net Trading Income closed at LKR 864.7 million compared to LKR 155.1 million. After providing for higher impairment, in order to mitigate risks of those businesses most vulnerable to economic shocks, the Bank’s Net Operating Income grew by 18% to reach LKR 4.72 billion from LKR 4.01 billion.
Despite 2022 average inflation being in excess of 45%, the Bank contained the YoY rise of its Operating Expenses to 16.4%. As a result the Bank posted a noteworthy growth of 20% in Operating Profit Before VAT on Financial Services and Social Security Contribution Levy to reach LKR 1.73 billion compared to LKR 1.44 billion recorded a year back. The Bank’s aggregate tax contribution of LKR 948 million accounted for a significant 55% of the Bank’s Operating Profit before all taxes.
Amidst market liquidity constraints and intense competition for funds in the market, the Bank’s deposit portfolio crossed the landmark of LKR 100 billion and recorded a commendable growth of 17% to close at LKR 112.5 billion, up from LKR 96.1 billion. This reflects the trust and confidence placed by customers on the Bank’s stability and resilience. The Bank continued to maintain a strong portfolio of Current Accounts and Savings Accounts (CASA), which stood at 43% by YE 2022.
Based on its prudent approach to customer financing, the Bank’s advances portfolio recorded a growth of 10% to reach LKR 83.1 billion rising from LKR 75.8 billion YE2021. Timely customer engagement and effective portfolio management resulted in containing Stage 3 Impaired financing ratio to 2.1%, well below the market average.
The Bank’s Total Assets grew by 16% or LKR 19.8 billion to close at LKR 141.7 billion. Supported by the increase in reserves, the Bank’s Total Capital Ratio improved in the year under review to 15.8% and stood well above the minimum regulatory requirement of 12.5%.
As a result of its sustained profitability, Amana Bank, paid its 5th successive annual dividend by way of a Scrip Dividend which totaled to LKR 269 million with a Dividend Yield of 3.4%.
Amidst multiple economic challenges faced by the banking industry, Fitch Ratings reaffirmed Amana Bank’s National Long Term-Rating at BB+ (lka) with an RWN outlook in their latest review in September 2022. The rating affirmation under stressed market conditions demonstrates the Bank’s financial stability and strong all round performance it has been able to deliver over the years.
Commenting on the Bank’s 2022 performance, Chairman Asgi Akbarally said “I am most humbled to announce that despite facing many challenges throughout the year, Amana Bank’s vision, agility and ethical business model combined with strong customer engagement enabled the Bank to record its best-ever performance to date. I find this to be a commendable achievement as it comes in the backdrop of unprecedented macroeconomic challenges Sri Lanka has experienced in recent history. The unique model of banking adopted by Amana Bank shielded its exposure to many elements which posed challenges across the industry thereby bolstering the Bank’s resilience against economic turbulence. I would like to express my immense gratitude to my fellow Directors, management and staff as well as to our customers and other stakeholders. Looking ahead Amana Bank will aim to build on the success achieved in 2022, while continuing to be prudent of the environmental dynamics, as we move with fortitude to a new and exciting phase in the future.”
Also sharing his views Amana Bank’s Managing Director/CEO Mohamed Azmeer said “It has been an eventful year for Amana Bank, where despite the multitude of external challenges, the Bank made strong headway in reinforcing its value proposition while also making inroads in the Bank’s digital footprint. Anchored to our ethos of people friendly banking, we went beyond to deepen relationships with our customers and truly understand their unique circumstances in order to guide them through this period of unprecedented challenges. Our performance is a further testament to the Bank’s resilience and clear strategic direction by the Board to steer the Bank through these extremely challenging times coupled with the passion and commitment of our staff. I am thankful to our Directors, Management, Staff, shareholders, customers and valued partners. I am confident that our people-friendly banking model and our investment in expanding our Digital footprint and Regional footprint will together provide the impetus to steer Amana Bank forward in the years ahead.”
Amãna Bank PLC is a stand-alone institution licensed by the Central Bank of Sri Lanka and listed on the Colombo Stock Exchange with Jeddah-based IsDB Group being the principal shareholder having a 29.97% shareholding of the Bank. The IsDB Group is a ‘AAA’ rated multilateral development financial institution with a membership of 57 countries. Testifying its position as a leading practitioner of the non-interest based banking model, Amãna Banks continued to be recognized amongst the Top 100 Strongest Islamic Bank’s in the World by The Asian Banker. Amãna Bank does not have any subsidiaries, associates, or affiliated institutions apart from its engagement with OrphanCare as its Founding Sponsor.