Bank of Ceylon ends 1H with satisfactory results given COVID impact

Banking sector giant Bank of Ceylon has concluded the first half of the year once again earning industry leadership in terms of assets, deposits, advances and revenue.  

Chairman Kanchana Ratwatte

Acting General Manager D.P.K. Gunasekara

This year the bank has delivered results despite facing unprecedented challenges. Although, the bank has ended the first half with satisfactory results, the Year-on-Year decrease in numbers that has been reported is not a surprise given the headwinds across all global economies due to the effects of COVID-19.

Despite the challenging economic conditions, the bank has reported the highest industry growth rates in revenue, deposits and advances for the first half of the year. The revenue of the bank for the period was Rs. 118.3 billion with a YoY increase of 2.4 %. The bank has reported a Profit Before Tax (PBT) of Rs. 6.9 billion and Profit After Tax (PAT) of Rs. 5.8 billion for 1H-2020 notwithstanding the consequences of the COVID-19 pandemic. 

However, the bank’s net interest income showed 18% decrease YoY mainly due to accounting for the day one loss on COVID -19 moratorium and increase in interest expense in line with growth of the deposit base. Due to the stability and trust earned from the public, the bank experienced more deposits coming to the bank given the instability created in the market due to pandemic related economic disruptions, causing interest expense to rise. 

The impact of the Moratorium was accounted against the interest income based on the modification method given in the Sri Lanka Financial Reporting Standard (SLFRS) 09 and the resultant day one loss of Rs. 6 billion has been adjusted to interest income.

Showing the prudential management approach of the bank, operating expenses has contracted by 7% YoY. Also many cost controlling and rational approaches in expense items were adopted in this extraordinary situation. However, the bank had to make an impairment charge of Rs. 14.7 billion for the loans and advances by accounting for a significant increase in credit risk.  

Despite all these challenges the bank’s asset base grew by 11% to Rs. 2.7 trillion, backed by a 14% surge in the loan book. The bank’s loan book stood at Rs. 1.8 trillion and both Government and private sector lending have contributed to this growth. 

The bank’s deposit base which represents 23% of the industry has increased during 1H 2020, despite the low interest rates prevailing in the market. The bank’s deposit base of Rs. 2.2 trillion represents 32% of Current and Savings deposit (CASA) base which generates funds at low costs. This reflects the trustworthiness built up in the customer mind regarding BOC as the market leader. 

Further, the bank has reported the NPA ratio of 5.35%for 1H 2020 demonstrating its robustness in monitoring and recovery measures of loans and advances even in a traumatic situation. 

In responding to this extraordinary challenging time, Bank of Ceylon has articulated its accountability to its stakeholders and the nation as the number one bank in Sri Lanka by playing a significant role in the economic revival and ensuring the financial system functionality of the country. 

When the entire country was in a complete lockdown state, the bank kept the wheels of the economy moving by ensuring a continuous money supply, facilitating payment and settlement etc. through utilising its islandwide network with the widest reach. 

All of the bank’s digital channels, mobile branches and a large number of branches were kept functioning to cater to the financial needs of the ordinary citizens, businesses and also the Government and State institutions. 

The bank’s role in passing out the benefits of the moratorium and the special low interest working capital loan announced by the CBSL in order to facilitate the revival of the COVID-19 hit businesses and individuals is also unparalleled and commendable considering that it is the bank with the largest customer base with over 13.7 million accounts. 

Although the period under review is the most challenging period in the recent decade faced by all economies around the world and that Sri Lanka is no exception, the bank through its half year performance has showcased its resilience and the stability to withstand any extraordinary and challenging circumstances.  

Being once again recognised among the Top 1000 Banks in the World by the Banker Magazine and becoming the country’s number one in this prestigious list is another accolade the bank has received, consolidating its globally commendable excellence and leadership position in the market.

Taking a positive approach on the country’s more than expected rate of recovery from the COVID-19 pandemic related economic downturn, he Chairman Kanchana Ratwatte and Acting General Manager D.P.K. Gunasekera of Bank of Ceylon are optimistic about promising results towards the end of the financial year.