Samba Bank delivers

Samba Bank Limited may well be a smaller bank, but its CY14 achievements are by no means small. From top to bottom, Samba ticked all the right boxes. The after-tax profits nearly trebling year-on-year was a just result. Samba has an un-characteristically high portion of advances in its asset mix, but it also did not need an invitation to taste some PIB feast on offer during CY14.
The asset composition is still tilted in favour of advances, with an ADR of 63 percent. But it has come down from 73 percent as at December 31, 2013. The fast deposit growth is smartly distributed as Samba parked sizeable funds in low risk, high return government securities. That said a significant contribution is also believed to have been generated from core advances.
The bank also continues its focus on generating income through cross-selling as the non-core income showed good contribution. This is even more important as banks are facing challenges on the spread side, especially smaller ones like Samba. Sambas loan book remains clean as the banks rigorous efforts towards recoveries is reaping good fruits.
Samba Bank is committed to increase its presence through expansion.
The asset mix might not have to be changed drastically in the changing times of interest rate reversal. Samba appears to be well planted to tackle the challenges that CY15 is likely to throw especially in terms of tightening spreads.
The key will remain its deposit growth, and more importantly, the deposit composition. The earlier improves the CASA, the better it will be, in these circumstances.

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Samba Bank Limited (Unconsolidated P&L)

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Rs (mn)                               CY14     CY13     chg

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Markup Earned                        4,619    3,207     44%

Markup Expensed                      2,806    1,823     54%

Net Markup Income                    1,813    1,384     31%

Provisioning/(Reversal)               (99)     (90)     10%

Net Markup Income after provisions   1,912    1,474     30%

Non Mark-up/Interest Income            217      160     35%

Operating Revenues                   2,129    1,634     30%

Non Mark-up/Interest Expenses        1,704    1,553     10%

Profit Before Taxation                 425       82    421%

Taxation                               199      (3)

Profit After Taxation                  226       84    168%

EPS (Rs)                              0.24     0.10

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Source: KSE Notice