Silkbank Limited (PSX: SILK) has released its financial results for the fiscal year ending December 31, 2021, reporting a significant increase in net losses. The bank recorded a net loss of Rs. 12.28 billion, an alarming 87% rise compared to Rs. 6.57 billion in 2020. This sharp decline highlights the challenges faced by Silkbank during the period.
No dividend payouts were announced for shareholders during the review period, reflecting the financial strain experienced by the institution.
Despite a 65% year-on-year increase in Net Interest Income (NII), which totaled Rs. 2.83 billion, Silkbank struggled with mounting expenses and declining revenues in critical areas. The bank’s interest expenses amounted to Rs. 7.6 billion, while interest income remained in the negative at Rs. 3.92 billion, underscoring the pressures on its core operations.
The bank showed a marginal improvement in foreign exchange income, which rose by 22% to Rs. 279 million compared to Rs. 228 million in the previous year. However, these gains were overshadowed by a substantial loss of Rs. 1.58 billion incurred from the sale of securities, adding further strain to its overall financial performance.
Operational expenses (OPEX) decreased slightly to Rs. 7.45 billion from Rs. 7.57 billion in the same period last year, reflecting minor cost control efforts. Nonetheless, this reduction was insufficient to offset the bank’s broader financial challenges.
A significant portion of the bank’s losses was also attributed to a steep increase in tax payments, which nearly doubled to Rs. 6.35 billion in 2021 compared to Rs. 3.1 billion in 2020.
Loss per share (LPS) surged to Rs. 1.35 in 2021, a significant deterioration from the LPS of Rs. 0.72 reported in the preceding year. This metric highlights the impact of the bank’s financial struggles on shareholder value.
Silkbank’s performance in 2021 underscores the continued headwinds faced by the financial sector, including rising interest expenses and volatile market conditions. The results reflect the need for the bank to implement strategic measures to address its financial health and stabilize operations in the coming periods.
The significant jump in losses paints a challenging picture for Silkbank, which must now focus on mitigating risks, enhancing revenue streams, and managing operational costs to regain investor confidence and navigate a path to recovery.