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Commercial Bank of Ceylon PLC announced yesterday a profit before VAT and NBT of Rs. 5.377 billion for the three months ending 31 March 2016, commencing the year with a robust 27.89% growth, made possible by notable improvements in business volumes and reduced growth in charges.
Sri Lanka’s largest private bank’s profit before tax for the quarter was up 27.95% to Rs. 4.579 billion, and profit after tax grew by 28.92% to Rs. 3.234 billion, according to a filing with the Colombo Stock Exchange (CSE).
A record Rs. 101 billion year-on-year growth in its loan book resulted in interest income increasing by Rs. 2.415 billion or 15.45% in the quarter to Rs. 18.050 billion, the bank said.
Net interest income for the three months was Rs. 8.113 billion, a growth of 12.17%, the lower growth rate due to an 18.27% increase in interest expenses (Rs. 9.937 billion) consequent to a rise in rates.
Total operating profit for the period reviewed at Rs. 10.979 billion reflected an improvement of 13.39%, with the bank achieving a noteworthy reduction of 25.17% in total impairment charges through a reversal in the provision for individual impairment due to an improvement in NPLs. Net operating income grew by 19.53% to Rs. 9.983 billion.
“This is a solid start to the new year, particularly when viewed against the prevailing market conditions,” Commercial Bank Chairman Dharma Dheerasinghe said. “The bank’s ability to increase volumes in all key areas of business, thereby minimising the impact of a drop in gains from bond trading, indicates an operational strength that augurs well for the rest of the year.”
Commercial Bank Managing Director/CEO Jegan Durairatnam described the Bank’s first quarter performance as “creditable and confident” and said projections based on the steady growth of its asset base indicated the bank is poised to record significant improvements in all areas in the current year.
Total assets grew by Rs. 45 billion or 5.09% from 31 December 2015 to Rs. 924.575 billion at 31 March 2016. Gross loans and advances increased by Rs. 29.317 billion over three months from Rs. 526.167 billion at the end of 2015 to Rs. 555.484 billion at the end of the quarter under review, growing by a monthly average of Rs. 9.77 billion.
Deposit growth over the three months averaged a similar Rs. 9.65 billion per month, taking the bank’s total deposits to Rs. 653.040 billion as at 31 March 2016.
Elaborating on the growth achieved in key areas of business in the quarter reviewed, the bank said net fees and commissions improved by 16.19% to Rs. 1.460 billion and total other income grew by 17.87% to Rs. 1.406 billion, the latter as a result of higher net gains from trading, mark to market gains and exchange gains. However, other income including gains from bond trading declined by 81.36% or Rs. 1.470 billion compared to the previous year’s figure.
Total impairment charges for the three months at Rs. 995.075 million reflected a reduction of Rs. 334.617 million, due to a reversal of Rs. 142.763 million in provisions for individual impairment, compared to a provision of Rs. 210.453 million in the first quarter of last year. This was mainly as a result of the reduction in the number of loans subjected to individual impairment in the three months reviewed.
Total shareholder funds stood at Rs. 64.855 billion as at 31 March 2016, and this was lower than the figure reported as at 31 December 2015, the bank said, due to mark to market losses on the available-for-sale portfolio. The bank successfully raised Rs. 6.179 billion via a debenture issue during the quarter with a view to boosting its Tier II Capital base.
In other key performance indicators, the bank’s Tier I capital adequacy ratio stood at11.12% at the end of the quarter, while the total capital adequacy (Tier I + Tier II) increased to 14.77% from 14.26% with the debenture issue done qualifying for Tier II capital. The gross and net non-performing loans (NPL) ratios stood at 2.64% and 1.38% respectively as against 2.74% and 1.41% at the end of 2015. These ratios were 3.40% and 1.88% one year previously, at the end of Q1 2015.
As a group, Commercial Bank, its subsidiaries and associates reported profit before tax of Rs. 4.640 billion for the quarter ended 31 March 2016, an improvement of 27.74%. Profit after tax for the three months grew by 28.65% to Rs. 3.264 billion.
The only Sri Lankan bank to be ranked among the Top 1000 banks of the world for five consecutive years, Commercial Bank operates a network of 250 branches in Sri Lanka and an ATM network of 626 terminals. The bank was ranked the most valuable private sector brand in Sri Lanka in 2014 and has also won multiple awards as Sri Lanka’s best bank from a number of international publications over several years. The bank was adjudged one of Sri Lanka’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013 and 2014.
Commercial Bank’s overseas operations encompass Bangladesh, where the bank operates 18 branches and Myanmar, where it has a Representative Office in Yangon. In September 2015, the bank received regulatory approval for the establishment of a fully-fledged Tier I Bank in the Republic of Maldives. The bank also received license to operate a fully owned Money Transfer Operation in Italy recently.
