ComBank posts stellar results in 2024 after absorbing SLISB restructure loss of Rs. 45 b

Chairman Sharhan Muhseen (left) and Managing Director/CEO Sanath Manatunge

• Net reversal of 
• Rs. 62 b in impairment provisions compensates for loss from sovereign bonds restructuring 
• Further accelerates lending with loan book growth of Rs. 230 b, with approximately half of growth coming in Q4
• Net interest income up 36.71% to Rs. 118 b
• Total taxes triple to Rs. 62 b
• Posts PBT of Rs. 98 b; 
• PAT of Rs. 56 b

The Commercial Bank of Ceylon Group has reported an exceptionally strong financial performance in 2024. Prudent provisioning for impairment charges and other losses, effective balance sheet management, and strong lending growth helped mitigate a substantial loss materialised from the restructuring of the Sri Lanka International Sovereign Bonds (SLISBs) held by the bank.

The Group recognised its full net loss of Rs. 45.11 billion from the restructuring of SLISBs in the final quarter of the year, resulting in gross income for the 12 months ending 31 December 2024 reducing by 19.50% to Rs. 274.98 billion. However, a net impairment reversal of Rs. 62.30 billion, primarily due to provision reversals in respect of SLISBs, significantly cushioned the overall impact. Lower interest rates brought interest income down by 7.54% to Rs. 275.22 billion, further impacting the Group’s topline, the Group said.

Timely repricing of deposits and the strong CASA base of the bank resulted in total interest expenses reducing by 25.63% to Rs. 157.08 billion, enabling the Group to record a healthy growth of 36.71% in net interest income to Rs. 118.13 billion, compared to Rs. 86.41 billion in 2023. In the meantime, net fee and commission income grew by 5.62% to 

Rs. 23.65 billion.



Notably, a decrease in net other operating income of Rs. 12.19 billion, or 58.93%, was largely offset by a reduction in losses from trading of Rs. 10.28 billion or 82.37%. 

Consequently, the Group’s net operating income surged by 103.61% to Rs. 169.35 billion for the year under review, with Q4 alone contributing Rs. 73.65 billion, an increase of 227.25%. With operating expenses for the full year growing by a moderate rate of 17.04% to Rs. 51.84 billion, the Group reported an operating Profit Before Taxes (PBT) on financial services of Rs. 117.52 billion, an increase of 202.21% over the previous year.

Taxes on financial services increased by 297.20% to Rs. 19.71 billion, resulting in a profit before income tax of Rs. 97.81 billion for the 12 months, an improvement of 188.29% over the previous year. The income tax charge for the year increased by 250.22% to Rs. 42.12 billion, leading to a net Profit After Tax (PAT) of Rs. 55.69 billion for 2024, reflecting a growth of 154.28%. 

Total tax charges of the Group for the year amounted to Rs. 61.83 billion, well over triple the Rs. 16.99 billion tax charge in respect of the preceding year.

Taken separately, Commercial Bank of Ceylon PLC reported a PBT of Rs. 95.53 billion, and a PAT of Rs. 54.07 billion for the year reviewed, recording growths of 199.67% and 164.28%, respectively. Basic earnings per share rose to Rs. 37.74, up from Rs. 14.89 for 2023.

Commercial Bank Chairman Sharhan Muhseen said: “While we appreciate that greater stability has been achieved in the country’s macroeconomic environment and that the restructuring of sovereign debt is a positive step, its final outcome is a substantial loss for most banks. In that context, our 2024 results highlight the value of Commercial Bank’s prudential approach to managing external challenges as well as its core banking obligations, and its ability to leverage on operational resilience in difficult times.”

Managing Director/CEO Sanath Manatunge noted that the hank had in 2023 proactively increased its provision cover for possible losses from SLISBs from 35% to 52%, and further increased the cover to 54% in the second quarter of 2024, resulting in a cumulative impairment provision of Rs. 92.86 billion on SLISBs up to the date of derecognition of these bonds. These measures helped the bank mitigate the net losses sustained on the restructuring of these bonds. 

Lending reached an all-time high in the final quarter of the year reviewed, during which the loan book grew by a noteworthy Rs. 108.69 billion at a monthly average of Rs. 36.23 billion. This drove the gross loans and advances to Rs. 1.53 trillion, an improvement of 17.73%. Deposit growth also accelerated, increasing by Rs. 79.56 billion in Q4 alone at a monthly average of Rs. 26.52 billion, bringing the total deposits to Rs. 2.31 trillion, with a year-on-year (YoY) increase of 7.36%. As a result, total assets of the Group increased by Rs. 220.39 billion over the 12 months to Rs. 2.876 trillion as at 31 December 2024, reflecting a healthy growth of 8.30%. 

The CASA ratio of the bank stood at 38.07% as at 31 December 2024, a marginal drop compared to 39.23% at end-December 2023, but remains one of the best in the industry, the bank said.

The bank’s cost to income ratio excluding taxes on financial services stood at 48.88%, while the figure inclusive of taxes on financial services was 68.18% for 2024. Notably, these ratios improved to 33.85% and 41.89%, respectively, when the effect of the net loss on restructuring of SLISBs is discounted.

In terms of asset quality, the bank’s impaired loans (Stage 3) ratio improved to 2.76% compared to 5.85% at end 2023, while its impairment (Stage 3) to Stage 3 loans ratio reached 64.61% from 43.22% a year ago, consequent to a decision to improve provision cover on a prudent basis.

Meanwhile, the bank’s liquidity coverage ratio for the year reviewed stood at 529.20% for Rupees and 454.36% for all currencies, both more than four times the statutory minimum ratios of 100%. The bank’s net stable funding ratio stood at 187.29% as at 31 December 2024, nearly double the minimum statutory requirement of 100%.

The bank reported its Tier 1 and Total Capital Ratios at 14.227% and 18.142%, respectively, as at 31 December 2024, both comfortably above the regulatory minimum ratios of 10% and 14%, respectively. The bank’s net interest margin increased to 4.27% for the year under review compared to 3.32% reported for 2023. The bank’s return on assets (before tax) improved to 3.56% from 1.27% for 2023, while return on equity too improved to 22.06% for the year from 9.78% for 2023.