COMBank posts Rs. 6.5 b pre-tax profit in 1H

Thursday, 15 August 2013 00:30 - - {{hitsCtrl.values.hits}}

Commercial Bank of Ceylon PLC has reported gross income of Rs. 34.720 billion and interest income of Rs. 30.168 billion at the end of its second quarter, achieving growth of 12.10% and 22.58% respectively through strong operational growth in the six months ended 30 June 2013. The bank reported pre-tax profit of Rs. 6.508 billion and post-tax profit of Rs. 4.472 billion for the six months, as against Rs. 7.507 billion and Rs. 5.173 billion for the corresponding period of last year, during which period translation gains on foreign exchange earnings were a major contributor to profits. In contrast, during the first half of 2013, foreign exchange income was adversely affected by mark to market losses on swaps relating to the

overseas funding raised by the bank in the recent past. Net interest income for the period improved by 6.24% to Rs. 11.932 billion. However, interest expenses grew by 36.30% to Rs. 18.236 billion, narrowing margins, the bank said. The rise in interest expenses in the review period was largely due to a noteworthy 8.64% growth in total deposits which increased by Rs. 34.162 billion over the six months to Rs. 429.537 billion as at 30 June 2013, reflecting an average growth of Rs. 5.7 billion per month. Other income improved by 9.32% to Rs. 3.060 billion for the six months, while net fees and commission income grew by 13.22% to Rs. 1.920 billion. Despite the lower demand for credit experienced by the industry, total loans and advances of the bank grew by 4.44% from Rs. 373.544 billion at 31 December 2012 to Rs. 390.119 billion at the end of the half year. “Signs of improving credit growth were witnessed during the latter part of the second quarter and this is expected to continue,” the bank said. Total assets of the bank increased by 9.06% from Rs. 511.7 billion at 31 December 2012 to Rs. 558.1 billion at 30 June 2013. Commenting on these results, Commercial Bank Chairman Dinesh Weerakkody said: “Operationally, we have much to be pleased about. We have maintained the momentum of deposit mobilisation and credit growth while improving capital adequacy and other ratios at a time when the banking industry in general experienced narrowing margins.” The bank’s Tier I Capital Adequacy Ratio improved to 13.85% as at 30 June 2013 from 12.64% at 31 December 2012, while Total Capital Adequacy (Tier I and Tier II) increased to 17.76% from 13.85%, largely due to a sum of $ 75 million raised by the bank from the International Finance Corporation (IFC) as a ten-year subordinated term debt that qualifies for Tier II capital. The gross and net non-performing loans ratios stood at 4.04% and 2.36% respectively as at the end of the first half of the year compared to 3.37% and 1.84% recorded as at the end of 2012 due to the relatively low collections experienced by the industry. Total expenses including personnel costs, depreciation, amortisation and other expenses for the six months was Rs. 6.990 billion, reflecting a marginal increase of 5.74%. “The focus on process improvement initiatives and cost containment helped the bank to manage expenses amidst escalating costs,” said Commercial Bank Managing Director/CEO Ravi Dias. Taken as a group, the Commercial Bank, its subsidiaries and associates posted pre-tax profits of Rs. 6.548 billion for the six months reviewed. Profit after tax for the six months was Rs. 4.490 billion. The largest private bank in Sri Lanka and the only Sri Lankan bank to be listed three years consecutively in the world’s top 1,000 banks, Commercial Bank operates a network of 232 branches and service points and a network of 570 ATMs in Sri Lanka. The bank also operates 18 outlets in Bangladesh. The bank has won multiple awards as the country’s best bank over several years.