HNB recorded a healthy performance during the first half of 2014, with PAT of the Bank as well as the Group growing by 8% to Rs. 3.38 bn and Rs. 3.69 bn respectively.

This growth was achieved despite lower margins experienced during H1 of 2014 as a result of the drop in lending rates and over Rs 1.5 bn of interest written off on account of pawning.

The margins for the second half are expected to improve with re-pricing of deposits inline with the lending rates and the tapering off of the adverse impact from pawning.

Commenting on the performance, HNB Chairperson Dr Ranee Jayamaha said the solid performance recorded in the first six months of 2014 is attributable to the strategic focus, adoption of prudent policies, untiring efforts of staff at all levels, as well as the confidence placed on us by our valued customers.

Despite industry credit growth continuing to remain sluggish with a yoy growth of 4.4%, the Bank was successful in recording a yoy credit growth of 8.3% as at end of Q2 2014 through a focused sales drive. This growth was achieved notwithstanding a drop of approximately 40% in the pawning portfolio during the period.

The strong brand image as well as efforts of an effective sales force enabled the Bank to improve the total deposit base by over Rs. 22 bn during the first half of 2014, with the growth in low cost deposit base accounting for over 68% of the total growth. As a result,the local currency CASA ratio improved to 41.5% as at end of Q2 2014.

Though net interest income witnessed a drop inline with the industry as a result of lower margins, the Bank's continuing focus on enhancing fee based income enabled to record a robust growth of 20% in fee income with increase in card volumes, guarantee commission contributing towards the growth.

HNB Managing Director CEO Jonathan Alles said HNB has once again showcased its resilience backed by a very sustainable business model and strong strategic intent.

"Considering the expected changes in the macro conditions, the market potential and the opportunity for HNB to propel growth we have already commenced the process of formulating our strategic plan for the next three years," he said.