State banks profits have plunged: UNP MP Harsha

Saturday, 5 April 2014 00:13 - - {{hitsCtrl.values.hits}}

In response to the story on Bank of Ceylon profits published in the Daily FT yesterday based on a statement released by the bank, UNP MP Dr. Harsha de Silva issued the following statement:

“Your story that Bank of Ceylon has made Rs. 15.7 billion profit before tax which is the highest among its peers for last year. While that may be true, what was conspicuously absent in your story is the significant decline in profits and the alarming rise in non-performing loans. The story is similar at People’s Bank as well. Profits have slumped and credit losses have mounted. “We note with concern that Bank of Ceylon’s profits before tax for 2013 has fallen sharply by 20.6% from Rs. 19.8 billion in 2012. At People’s Bank pre-tax profits have fallen by 32.4% to Rs. 10.3 billion in 2013 from Rs. 15.2 billion a year earlier. “Of equal and even greater concern is the significant increase in non-performing loans in both banks. The two State banks’ loan loss provisions have more than doubled from under Rs. 10 billion in 2012 to more than Rs. 20 billion in 2013. While it is known that both banks took a hit on their pawning business, they must ensure that loans to various Government agencies are made after careful review and ability to repay. This factor is becoming important in the background that it is understood that State banks are being compelled to lend to various ego-boosting projects of the Government. “In its latest statement Bank of Ceylon has taken credit for lending to the Government for 368 km of road development without specifying the amount lent and billions to other infrastructure projects in the power and water sectors. Perhaps the story at People’s Bank could be similar or even worse, we do not know. “As a responsible Opposition, the UNP would like to urge the Boards of the two State banks to be very mindful in making their lending decisions, particularly to various Government projects with repayment uncertainty, in this rather negative scenario where credit losses are mounting and profits are slumping.”