Amana Bank proves resilience with best ever performance 

  • PBT grows by 92% to LKR 2.3 billion; PAT up by 76% to reach LKR 1.4 Bn

Amana Bank concluded a historic 2023 with its strongest-ever financial performance to date, demonstrating the Bank’s stability, resilience and growing acceptance amidst a challenging economic environment. The Bank’s audited Profit Before Tax (PBT) nearly doubled to LKR 2.3 billion, reflecting a remarkable 92% YoY increase from LKR 1.2 billion in 2022. Profit After Tax (PAT) for 2023 broke through the LKR 1 billion threshold to reach LKR 1.4 billion, showcasing a YoY growth of 76% from LKR 0.8 billion in 2022.

Supported by strong growth in core business, the Bank’s financing income increased to LKR 17.2 billion in 2023, up by 42% from LKR 12.1 billion reported in the previous year. Maintaining a healthy financing margin of 4.3%, the Bank went on to record a Net Financing Income of LKR 6.5 billion, a 36% YoY increase from LKR 4.8 billion registered in 2022.

Fee-based income also reflected substantial improvement of 24% to LKR 931 million, driven mainly by trade volumes generated from our valued business banking customers as well as increased digital transactions and other value added services.  Assisted by higher Net Trading Income and other gains, the Bank’s total operating income rose to LKR 9.2 billion, reflecting a remarkable growth of 45% from the LKR 6.4 billion achieved in 2022.

Considering market conditions, the level of the Bank’s advance portfolio, and the need to prudentially maintain higher credit buffers, Impairment charges for the year rose to LKR 2.1 billion from LKR 1.6 billion in 2022, an increase of 29%. Despite the incremental impairment charges, Net Operating Income recorded a noteworthy YoY growth of 50% to reach LKR 7.1 billion from the previous year’s amount of LKR 4.7 billion.

Sustaining an improved and healthy 42% cost to income ratio despite prevailing inflationary pressure, the Bank closed the year with an Operating Profit before VAT on Financial Services and Social Security Levy of LKR 3.2 billion, denoting a 85% increase from a year back. The Bank’s aggregate tax contribution of LKR 1.8 billion accounted for a significant 57% of the Bank’s Operating Profit before all taxes.

Despite the overall banking industry experiencing negative credit growth, Amana Bank transitioned to positive growth by tactically shifting its focus towards top-tier corporates. As a result, the Bank achieved noteworthy 8% growth in its advances to close at LKR 89.7 billion from LKR 83.2 billion in 2022. This growth was achieved while continuing to have one of the lowest industry-wide Stage 3 Impaired financing ratio of 1.5% owing to the Bank’s effective risk management framework and timely customer engagement, driven by its unique people friendly and development focused approach. By understanding the unique circumstances of SMEs, the Bank continued to provide assistance and advisory services to help improve their liquidity position and strengthen their business continuity, financial resilience and revival efforts in difficult times.

Moreover, testifying the strong customer confidence and the growing demand for the Bank’s value proposition, deposit mobilisation activities gained strong traction, amidst tight market liquidity conditions and stiff competition for funds in the market. As a result the Bank’s deposit portfolio grew significantly by 18% to LKR 132.9 billion while maintaining an industry high CASA ratio of 40%.

Towards fuelling its ambitious growth plans, the Bank successfully secured LKR 6 billion through its Rights Issue carried out in Q4, which garnered diverse participation from existing shareholders and new investors, including prominent foreign, corporate, and high-net-worth individuals. The Rights issue enabled the Bank to achieve its objectives of meeting the enhanced minimum capital requirement in line with latest regulatory directions to the banking industry.

Crossing the LKR 150 billion landmark, the Bank’s Total Assets grew by LKR 17.8 billion or 13% YoY from LKR 141.7 billion in 2022 to close at a solid LKR 159.5 billion as at end-December 2023.

Given the strong financial performance for 2023, Amana Bank’s ROE grew to 7.7%  from 5.6% recorded in 2022, despite the capital infusion of over LKR 6 Bn in the latter part of the year. As at 31 December 2023, Amana Bank’s Common Equity Tier 1 and Total Capital ratios stood at 16.5% and 19.3% respectively, well above the regulatory minimum requirement of 7% and 12.5% respectively.

Sharing his views on the Bank’s performance, Chairman Asgi Akbarally said “Proving its resilience and ability to power through mounting challenges, I am humbled to note Amana Bank closed the financial year 2023 achieving a number of historical milestones including the best ever financial results in the Bank’s history. These achievements are a testament to the growing acceptance of our people-friendly and development focused banking approach as well as the enduring trust and confidence placed on us by our stakeholders. I would like to express my immense gratitude to my fellow Directors, management and staff as well as to our customers and shareholders. Amana Bank will approach the future from a position of strength as we continue to give leadership to this growing industry.”

Commenting on the Bank’s performance Managing Director/CEO Mohamed Azmeer said “2023 was a historic year for Amana Bank, characterized by exceptional performance and remarkable achievements while strengthening the Bank’s foundation for our ambitious growth plans with fresh capital infusion that underscored the Bank’s resilience and stakeholder confidence amidst a challenging economic environment. This performance was a result of the Bank’s continued support towards SME, Corporate and Retail sectors facilitating their needs while adding value to the economy at this crucial juncture where the country’s economic revival is taking shape.  I am thankful to our Chairman and the Board of Directors, management, staff, shareholders, customers and valued partners. With the enhanced capital in place, Amana Bank is strategically positioned on a robust launch pad for growth, poised for new horizons, through investments in our core business expansion, digital footprint, and sustainable banking initiatives.”

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 of the Bank. The IsDB Group is a ‘AAA’ rated multilateral development financial institution with a membership of 57 countries. Testifying its position as the leading practitioner of the non-interest based banking model, Amãna Bank continued to be recognized amongst the Top 50 Strongest Islamic Bank’s in the World by The Asian Banker, marking a notable rise to 37th position in 2023.

Amãna Bank does not have any subsidiaries, associates, or affiliated institutions apart from its engagement with OrphanCare as its Founding Sponsor.