Merchant Bank of Sri Lanka (‘MBSL’ or the ‘Company’) continued to sustain its growth momentum subsequent to the recent amalgamation, generating a net profit of Rs. 59.24 million during the third quarter of the financial year. Meanwhile, MBSL Group (comprising of MBSL and its subsidiaries) further trimmed its losses for the cumulative period, with the nine-month loss contracting to Rs. 31.27 million.
MBSL has demonstrated strong resilience to successfully overcome multiple operational challenges presented by the amalgamation; the company incurred a net loss of Rs. 135.99 million during the first quarter immediately following the amalgamation, weighed down by impairment losses stemming from the legacy portfolios of several of the merged entities.
However, sound strategy and cohesive efforts to maximise synergies from multiple business lines enabled the company to post strong turnaround in the second quarter of the year generating a net profit of Rs. 92.44 million, whilst performance continued to be strong during the quarter ended 30 September with net profit clocking in at Rs. 59.24 million.
Despite the relatively benign interest rate environment, focus on deepening existing customer relationships and widening the product portfolio allowed the company to achieve an expansion in its loan portfolio. Resultantly, interest income for the quarter amounted to Rs. 1 billion, whilst astute management of asset liability maturity mismatches allowed the company to benefit from the falling interest rate scenario, with cumulative net interest income increasing to Rs. 1.40 billion during the nine-month period ending 30 September.
At Group level, although net interest income remained relatively unchanged compared to the corresponding period of last year, a strong growth in fee and commission income enabled the Group to achieve an increase in its net operating income to Rs. 1.45 billion. Maintaining portfolio quality continued to be a key priority for the company, the results of which are reflected in the sustained decline of its impairment charges in recent quarters.
The outlook for the company is promising over the medium to long-term with performance anticipated to be fuelled by efforts to optimise operational models and drive synergies across all business lines. Cohesive efforts towards increasing market share, widening the product portfolio and a proactive approach towards risk management is anticipated to facilitate these growth levels over the medium to long-term.