Samba Bank that effortlessly parked its money in investments until third quarter of CY13 and that too through significant amount of borrowing through repurchase agreements, turned around its stance in the last quarter of CY13. It not only shunned away its borrowings in the last quarter but also its investments. Advances, however, kept growing and resulted in an Advances-to-Deposit Ratio (ADR) in excess of Investment-to-Deposit Ratio (IDR).
While the detailed financial statements are not released to figure-out whether or not the bank has reverted back to its earlier stance of heavy investments, the healthy top line growth of 28 percent year on year in 1Q CY14 signals that advances might have taken the lead this time too. Net Interest Margin (NIM) also grew by 27 percent year on year in 1Q CY14.
The reversals booked by the bank in 1Q CY14 shows there had some improvement in the asset quality as it happened in CY13 too.
Non-mark-up income also grew staggeringly during the period with the growth largely coming on the back of fee, commission and brokerage income. The bank also made capital gains on the sale of securities and revaluation gain on the securities held for trading vis-à-vis losses made in these two categories in the similar period of last year.
The bottom line ended up growing by over 2 times in 1Q CY14. It should be noted that Samba improved its non-mark-up income which didn show any significant growth in CY13. Besides, healthy top line growth propelled the bottom line.
While Samba looks quite strong in 1Q CY14, it should be careful not to switch its asset stance too often, like it did in CY13. Perhaps, a balanced asset portfolio is the formula for future sustenance.
Comments are closed.