The Group posted a commendable performance in spite of a challenging operating environment across markets. Group profits were up by 15.8% to Rs 6.626 billion, with earnings per share rising from Rs 24.04 to Rs 27.82.

Operating income grew by 9.1% to reach Rs 14.418 billion. Despite the loan portfolio declining slightly, net interest income rose by 9.0%, driven mainly by increased revenue from investments in Government securities.

Notwithstanding a drop in net fee and commission income essentially due to the impact of low oil prices on regional trade financing, non-interest income grew by 9.2% to attain Rs 5.528 million, on the back of a 25.8% rise in profit on exchange and a gain associated with the successful exit from an investment at the level of our equity fund.

Growth in operating expenses was contained at 4.8%, leading to a fall in our cost to income ratio to 40.2%. Net impairment charges dropped by 12.3% to stand at Rs 988 milion, representing 0.57% of the loan portfolio while the Non-Performing Loans to Gross loans ratio was maintained at 6.2%.

Group profits were also boosted by a significant rise in the share of profit of associates to Rs 735 million on account of improved results from both BFCOI and the PAD Group, the latter having benefited from non-recurrent gains from the disposal of shares.

Results of the banking cluster grew by some 11% during the year but, due to the excellent performance of the non-banking activities, its contribution to Group profits dropped from 94% to 90%. The share of Segment A (domestically-sourced) income increased by one percentage point to reach 40% while the strong performance at the level of our foreign subsidiaries and associates boosted their contribution from 11% to 14%.

In line with the dampened evolution of loan portfolio and the continued expansion in shareholders’ funds, our overall capital adequacy ratio improved to 18.3% at year end, of which 15.3% by way of Tier 1 ratio.

Outlook

The operating environment is likely to remain challenging in FY 2016/17 amidst persisting global uncertainties and our markets continue to suffer from excess liquidity, both in local and in foreign currencies. Whilst the retail segment is anticipated to sustain its growth momentum, expansion of credit will be largely dependent on the regional economic performance as well as the kick-off of large public infrastructure projects and the time that domestic budgetary measures will take to impact private investment. Against this background and after factoring in a pick-up in the cost base in view of some major capacity-building initiatives, we expect moderate growth in operating profits for the coming year.

The operating environment is likely to remain challenging amidst persisting global uncertainties with our markets continuing to suffer from excess liquidity, in both local and foreign currencies. Whilst the retail segment is anticipated to sustain its growth momentum, further expansion of credit will be largely dependent on regional economic performance and on the implementation of public and private sector projects in the wake of recent budgetary measures. Against this background, we expect moderate growth in operating profits for the coming year.

Read the Group Management Statement