Commercial Bank posts Q1 pre-tax profit of Rs. 3.291 b

Tuesday, 13 May 2014 00:02 -     - {{hitsCtrl.values.hits}}

The Commercial Bank of Ceylon PLC has made a measured start to 2014, despite excess liquidity, lower demand for credit and thinning margins. The bank has reported operating profit before VAT and NBT of Rs. 3.897 billion for the three months ended 31 March 2014, reflecting growth of 4.73% over the first quarter of 2013. Operating profit after VAT and NBT (PBT) grew by a modest 1.88% to Rs. 3.291 billion, with VAT and NBT for the three months totalling Rs. 606.3 million, an increase of 23.53%. The bank’s profit after tax for the quarter reviewed was up 1.68% to Rs. 2.279 billion on gross income of Rs 17.760 billion. Commenting on these results, Commercial Bank Chairman Dinesh Weerakkody said: “The bank performed well this quarter, despite a very challenging environment. We continued to grow our business volumes as well as strengthen our key performance indicators. As we move into the second quarter, we expect to grow in the areas where we have a long track record of strong earnings, and will continue to execute on our strategic priorities.” Commercial Bank Managing Director Ravi Dias added: “The bank recorded healthy growth in net interest income despite narrowing margins through an increase in interest-earning assets and timely re-pricing of assets and liabilities.” The Bank had also achieved gains from trading and financial investments and contained the growth in expenses to under 10% in the period reviewed, he said, adding that the bank had also maintained the momentum of deposit growth, averaging more than Rs. 5 billion a month. The bank’s net interest income for the three months grew 17.07% to Rs. 6.571 billion. Net gains from trading recorded an increase of Rs. 377 million, while net gains from financial investments increased by Rs. 123 million. Net fees and commission income was up 15.24% to Rs. 1.047 billion. However, ‘other income’ comprising of recoveries and foreign exchange profit including translation gains, declined by 39.74% to Rs 679 million largely due to a drop in exchange profit and translation losses during the review period. Total operating income comprising of net interest income, net fees and commissions and other income amounting to Rs. 8.895 billion reflected an improvement of 14.84% for the quarter. Impairment charges on loans and losses increased from Rs. 517 million in the first quarter of last year to Rs. 1.151 billion in the quarter reviewed, due to higher Non-Performing Loans (NPLs), a common challenge faced by the banking industry. The bank’s gross NPL ratio increased from 3.88% at the end of December 2013 to 4.40% at the end of the first quarter of 2014, while its net NPL ratio increased from 2.12% to 2.54%. Total expenses for the period amounted to Rs. 3.847 billion, an increase of 9.68%. The bank said it expects a similar trend in expenses, as its plans moderate expansion of the branch network in 2014, given the fact it is now present in key towns in all districts of Sri Lanka. The bank’s total assets reached Rs. 648 billion at the end of first quarter 2014 recording a growth of Rs. 41 billion or 6.83%. Loans and receivables totalled Rs. 418 billion at the end of the period reviewed, while total deposits reached Rs. 481 billion. The bank’s capital adequacy ratios stood at a healthy 12.84% for Tier I and 16.34% for Tier I + Tier II, well above the minimum statutory requirement of 5% and 10%. Taken as a Group, the Commercial Bank, its subsidiaries and associates posted pre-tax profits of Rs. 3.324 billion for the three months, a growth of 2.13%. Group profit after tax was up 2% to Rs. 2.302 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 235 branches and 588 ATMs in Sri Lanka. Ranked the most valuable private sector brand in the country in 2014, the bank has won multiple awards as Sri Lanka’s best bank over several years, and was adjudged one of the country’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013.