COMBank 9-month operating profit tops Rs. 13 b

• 3Q acceleration sees PBT, PAT growths in excess of 20%
• Assets up by 23.19% in 9 months to Rs. 747.29 b
• 9-month PBT tops Rs. 11.2 b

The Commercial Bank of Ceylon PLC has reported profit before VAT and NBT of Rs. 13.119 billion for the nine months ended 30 September 2014, in a performance befitting its status as Sri Lanka’s largest private bank. In spite of a healthy 10.38% growth in operating income, profit before tax grew by 7.77% due to the imposition of Nation Building Tax (NBT) effective January this year, the bank said in a filing with the Colombo Stock Exchange. Profit after tax improved by 7.89% to Rs. 7.805 billion despite lower margins during the period under review resulting in gross income growing 2.14% to Rs. 54.644 billion, the bank said. Net interest income for the nine months was up 6.23% to Rs. 19.789 billion, and other income comprising of commissions, exchange profit, recoveries and gains on trading, grew by a noteworthy 21.63% to Rs. 8.366 billion, largely due to gains from financial investments. Commercial Bank Chairman Dharma Dheerasinghe described the bank’s nine-month performance as “characteristically robust,” with higher business volumes compensating to some degree, for the reduced margins. The bank’s Managing Director/CEO Jegan Durairatnam said momentum had picked up during the third quarter, during which pre and post-tax profit had grown by a healthy 21.62% and 20.40% respectively over the corresponding three months of 2013, to Rs. 4.739 billion and Rs. 3.326 billion. COMBank... Net operating income for the period improved by 9.89% to Rs. 24.713 billion, despite an increase in impairment charges by 14.04% to Rs. 3.443 billion, mainly due to a change in the basis of computation of provisioning for individual impairment. This change is intended to improve provision cover. Operating expenses for the period under review grew by 9.35% to Rs. 11.594 billion. Total assets increased by Rs. 140.683 billion or 23.19% over the nine months to Rs. 747.290 billion, from Rs. 606.607 billion at 31 December 2013, averaging a growth of over Rs. 15 billion a month. Total loans and receivables to banks and customers amounted to Rs. 482.940 billion at the end of the period under review, an increase of Rs. 63.435 billion or 15.12% since end December 2013. This represents an average loan book growth of Rs. 7 billion a month during the period. Total deposits grew by Rs. 53 billion or 11.75% over the nine months at an average of almost Rs. 6 billion a month, to Rs. 504.161 billion as at 30 September 2014. The bank’s Tier I capital adequacy ratio stood at 12.97% while the total capital adequacy ratio (Tier I + Tier II) stood at 16.13%, both well above the minimum statutory requirement of 5% and 10%. Commercial Bank improved gross and net NPL ratios to 3.84% and 2.10% respectively, from 3.88% and 2.12% at the end of 2013. The interest margin narrowed to 3.91% from 4.53% for the whole of 2013. Shareholder funds grew by 14.36% to 69.084 billion in the nine months reviewed. The Net Asset Value per share improved by 11.27% to Rs. 79.87. The bank has declared an interim dividend of Rs. 1.50 per share in respect of the period under review. The Commercial Bank share which traded as Rs. 155.90 (voting) and Rs. 113.90 (non-voting) at the end of the third quarter, traded at Rs. 174.00 and Rs. 118.50 respectively on 13 November 2014. Commercial Bank has the highest market capitalisation among companies in Sri Lanka’s financial services sector and ranks No. 3 among all listed companies.