Operating income grew by 10.3% to Rs 12,029 million. Net interest income increased by only 4.1% despite the significant expansion in the Group’s interest bearing assets. This reflects the lower yields recorded in the deployment of our excess liquidity domestically as well as lower interest margins generated on our loan portfolio, whose expansion was geared principally towards short term advances and commodity trade finance loans. Net fee and commission income rose by 39.9%, boosted by higher revenues from trade financing and payment activities. ‘Other Income’ declined slightly due to market volatility.

 

In line with continuing investment to strengthen our technological capabilities, operating expenses were up by 11.7% to Rs 4,532 million, leading to an increase in our cost to income ratio to 37.7% compared to 37.2% for the corresponding period in the previous year.

 

Net impairment charges fell by 19.2% to Rs 1,904 million, representing an annualised cost of risk of 103 basis points of gross loans and advances. The gross Non-Performing Loan ratio increased to 3.8%, compared to 3.6% in June 2021.

 

Our share of profit of associates grew by Rs 295 million on the back of the higher contributions from BFCOI and PAD Group.

 

Our capitalisation level remains comfortable with shareholders’ funds increasing to Rs 75.9 billion, contributing to a capital adequacy ratio of 17.9%, of which 16.5% in the form of Tier 1.

 

The operating context is still uncertain, as evidenced by the recent downgrade in the global growth prospects by the IMF, prompted by the emergence of the Omicron variant and the persisting supply chain disruptions, which are contributing to heightened inflationary pressures. The environment is thus likely to remain challenging for the local economy, with the pace and strength of its recovery being subject to the evolution of the global macro-economic parameters, the upturn in the tourism industry and the ramifications of rising inflation. Against this backdrop, the Group will anchor its growth performance on its diversification strategy while continuing to play an active role in helping the local economic rebound.