Hatton National Bank PLC’s standalone profit after tax rose 20.4 percent in the second quarter of 2026, supported by stronger net interest income and trading gains, even as the lender moved from an impairment reversal a year earlier to a charge.
The bank reported a quarterly profit of Rs. 13.19 billion, up from Rs. 10.96 billion a year earlier, according to its interim financial statements. Earnings per share increased to Rs. 22.85 from Rs. 18.98. Net interest income, the difference between interest earned and paid, climbed 29.7 percent to Rs. 28.40 billion as a sharp expansion in lending lifted interest income faster than funding costs. Interest income rose 21.4 percent to Rs. 60.82 billion, while interest expenses increased 14.9 percent to Rs. 32.42 billion.
HNB said the increase in net interest income during the first half was “supported by strong lending momentum, with the significant increase in interest income from loans and advances offsetting funding cost pressures stemming from the evolving interest rate environment.”
Quarterly net fee and commission income increased 21.1 percent to Rs. 6.61 billion. The bank attributed the first-half expansion in fees to higher digital banking activity, card transactions and contributions from transaction banking and leasing.
Trading income provided a further boost, with HNB recording a net trading gain of Rs. 3.90 billion in the quarter, compared with a loss of Rs. 271 million a year earlier. However, net other operating income fell 29.1 percent to Rs. 1.75 billion.
The combined gains lifted total operating income by 37.6 percent to Rs. 40.67 billion.
Part of that increase was absorbed by credit costs. HNB recognised an impairment charge of Rs. 1.54 billion, reversing from a Rs. 4.74 billion impairment gain in the corresponding quarter of 2025. Consequently, net operating income increased at a slower 14.1 percent to Rs. 39.13 billion. Operating expenses rose 8.7 percent to Rs. 13.10 billion, with personnel costs increasing 7.5 percent and other expenses rising 8.6 percent. The bank said higher foreign currency-denominated technology and payment-processing costs contributed to the increase in expenses during the first half. Quarterly profit before income tax rose 17.6 percent to Rs. 20.59 billion. Income tax expenses increased 12.9 percent to Rs. 7.40 billion.
At group level, second-quarter profit after tax rose by a marginal 0.8 percent to Rs. 12.20 billion. Profit attributable to HNB shareholders was almost unchanged at Rs. 11.77 billion, compared with Rs. 11.74 billion a year earlier, as higher insurance-related expenditure and other group costs diluted the stronger performance of the bank.
The difference was also evident in the six-month results. Standalone profit after tax increased 9.2 percent to Rs. 23.14 billion, while group profit declined 2.6 percent to Rs. 22.56 billion. HNB’s total comprehensive income fell 4.6 percent at bank level in the second quarter to Rs. 11.47 billion, as losses recognised on debt and equity investments through other comprehensive income offset part of the increase in reported profit.
The bank expanded its balance sheet rapidly during the first six months of the year. Net loans and advances rose 15.3 percent from end-2025 to Rs. 1.65 trillion, while deposits increased at a slower 7.1 percent to Rs. 2.10 trillion. Total assets grew 7.1 percent to Rs. 2.56 trillion.
The loan expansion drove impairment provisions of Rs. 4.09 billion for the six-month period, compared with a Rs. 5.12 billion reversal a year earlier.
Asset-quality indicators were mixed. The gross Stage 3 loan ratio improved to 4.42 percent from 4.56 percent at end-2025, while the net Stage 3 ratio edged up to 1.17 percent from 1.09 percent. Stage 3 impairment coverage declined to 73.42 percent from 75.97 percent.
The net interest margin increased to 4.40 percent from 4.26 percent. The annualised cost-to-income ratio improved to 34.48 percent from 37.82 percent, although return on equity declined to 16.79 percent from 18.11 percent.
Capital ratios weakened as the loan book expanded, while remaining above regulatory minimums. HNB’s Tier 1 capital ratio fell to 15.44 percent from 16.85 percent at end-2025, and its total capital ratio declined to 18.18 percent from 19.95 percent.
