Cargills Bank turns to quarterly profit in third year

Cargills Bank Ltd. has turned to profitability in its third year of operation recording a quarterly profit in the three months ended September 2016. 

The profit for the quarter ended was Rs. 26.4 million compared with the loss of Rs. 78 million during the same quarter of the previous year. Commenting on the performance Cargills Bank Chief Executive Officer Prabhu Mathavan said the overall performance has been commendable and augurs well for the business as it prepares for what is set to be an exciting financial year in 2017. 

“We continue to build our infrastructure to add a new dimension to the banking experience in Sri Lanka. Our particular focus on innovation and technology means that accessing a wider spectrum of customers with varying needs is becoming increasingly cost efficient. From farmers to corporates you would see Cargills Banking evolving into a bank that is accessible and meaningful to all,” Mathavan noted. Cargills Bank currently offers an attractive suite of products and would be expanding its portfolio to the sphere of cards during the forthcoming year. 

In the period ended the bank also succeeded in raising adequate capital to fulfil the mandatory Tier 1 Capital Requirement of Rs. 10 billion. “This is a boost for the bank both in terms of shareholder confidence and financial stability. The capital infusion helps the bank achieve profitability within a very short period by improving the core income of the business while also enhancing the credentials of Cargills Bank as the youngest player in the industry, “Mathavan said. 

During the period under review the bank also partnered several Government led initiatives in the Agriculture and Dairy sectors focusing on financial inclusion among smallholder farmers. “Cargills Bank has included the National Agri Development Program (NADEP) for Dairy Farmers into our SME portfolio. This program is conducted in collaboration with Kotmale PLC, a subsidiary of Cargills Group and NADEP promoted by the Presidential Secretariat to support 2400 dairy farmers. Our objective is to empower dairy farmers to enhance their access to finance and build on their entrepreneurial capacities by extending them the necessary financial and technical support to elevate and increase productivity while optimising their returns,” explained the CEO of Cargills Bank. 

The 9 months performance shows that the core operations of the bank are improving with Gross interest income for the nine months being Rs. 1,006 million compared to Rs. 348 million in 2015. Net interest income (NII) for the bank for the same period was Rs. 624 million compared to Rs. 218 million in 2015. Net fee income of the bank grew by 79% compared to 2015 to reach Rs. 45 million and other operating income of Rs. 37 million was a growth of 132% compared to the previous period. Accordingly, total operating income was Rs. 707 million for the period. Total operating expenses increased by 54% YoY to Rs. 740 million attributed to eight new branches being opened within the last two months of 2015. As at September the bank had 11 branches in operation and a new branch was opened in Galle in October this year with three more branches to open within this Financial Year. 

The bank recorded total asset growth of Rs. 5.2Bn for the period and total asset base reached Rs. 18.6 billion while loans and advances stood at Rs. 12.3 billion. Customer deposits grew by 89% for the period under review to reach Rs.7.3 billion by 30 September. There was also a substantial increase in the bank’s customer base. 

The bank is confident of continued progress in further reversing its loss position towards the end of 2016. “The year-ahead promises to be an exciting one with a strong leadership and management backed by progressive promoters and a sound Board, set to navigate the Bank into new frontiers in customer-centric banking,” Mathavan concluded.