DFCC delivers increased profitability in 1st half of FY 2016

DFCC recorded favourable growth in the first half of FY 2016 ending 30 June 2016, with a consolidated profit after tax of Rs. 1,721 million which is 16.1% over the Rs. 1,482 million recorded in the comparable period ended 30 June 2015. 

The total assets of the Group stood at Rs. 263,234 million as at 30 June 2016 compared to Rs. 247,109 million on 31 December 2015.

During the period under consideration, net interest income increased by 9.4% to Rs. 3,831 million from Rs. 3,503 million during the comparable period, while net fee and commission income grew by 14.7% to Rs. 600 million from Rs. 523 million. Other income was derived largely from dividends from the investment in the Commercial Bank of Ceylon Plc, supplemented by dividend from other equity securities classified as available for sale. Hence, dividend income recorded was Rs. 569 million compared to Rs. 558 million in the comparable period.

The impairment allowance during the current period was Rs. 644 million compared to Rs. 531 million during the comparable period. The increase in the impairment charge during the period was due to the provisions made on account of two large exposures based on available objective evidence. 

However, recovery processes are being pursued to minimise any actual losses that may arise from such exposures. The ratio of impaired loans to total loans as at 30 June 2016 was 5.5% compared to 5.1% as at 31 December 2015. The cumulative allowance for impairment for loans and advances was maintained at a healthy level of 70% of impaired loans and advances as at 30 June 2016.

Operating expenses were Rs. 2,178 million in the current period, a decrease of 7% over Rs. 2,344 million in the comparable period. Stringent cost control and efficiency measures continue to remain a priority in the bank’s operations.

The improved operating metrics enabled DFCC’s banking business to post a profit after tax of Rs. 1,600 million in the current period, which reflects a growth of 14.9% from Rs. 1,393 million recorded in the comparable period.

During the current period ended 30 June 2016, due to declining share market conditions, the available for sale securities recorded a fair value loss of Rs. 2,943 million. In the comparable period, the fair value loss was Rs. 1,247 million. 

Furthermore, DFCC’s equity capital is significantly augmented due to the recognition of net unrealised gain on the ordinary shares listed in the Colombo Stock Exchange and owned by the bank at fair value.

Commenting on the bank’s financial results, DFCC CEO Arjun Fernando said: “Our financial results during the first half of FY 2016 reflect what we believe is the first of the benefits arising out of the smooth amalgamation between DFCC and Vardhana achieved last year. These benefits will be further consolidated as the synergies of the merger flow across the enterprise. DFCC remains one of the best capitalised banks in the industry, with a Group Tier 1 capital adequacy ratio of 14.50% and a total capital adequacy ratio of 14.18%, which are well above the regulatory stipulated levels. I am confident that moving forward, we will be successful in further unlocking the potential of the bank to deliver even greater value to our shareholders.”

DFCC Bank remains dedicated to advancing financial inclusivity whilst supporting the growth and development of the nation. The bank continuously strives to create sustainable value for all stakeholders and provide its valued customers with a comprehensive range of innovative financial solutions.

During the period under review, the bank introduced Vardhana Virtual Wallet, which is a novel payment platform using a smartphone linked to the bank account, to enable customers to have the convenience of making safe and secure payments from their phone.