BoC leads growth course in 1H 2015 with Rs. 9.1 b PBT

Having closed its 75th year on a high note by delivering the highest-ever profit by a single entity in Sri Lanka, Bank of Ceylon continues to lead  its growth course in first half of 2015 with Rs. 9.1 billion Profit Before Tax (PBT), achieving 6% growth over the previous year. Profit After Tax (PAT) stood at Rs. 6.7 billion resulting in 8% growth. 

The Group reported Rs. 9 billion PBT, resulting in 5% growth over the corresponding period of the previous year and the Bank dominates the results of the Group accounting for 96% of total earnings and 97% of the Group’s assets. 

Total operating income for the period stood at Rs. 31 billion and shows a 24% increase which has been accelerated through 52% growth in net interest income and 53% growth in other operating income. Net interest income has increased due to higher interest income complemented by a 12% reduction in interest expenses depicting a greater efficiency in deposit mix management by the Bank which has contributed to improve the Net Interest Margin (NIM) by 36% to 3.4% on YoY basis.   

Despite the increase in personnel expenses, the bank has been able to maintain other expenses 17 % lower than those of the corresponding period in 2014, allowing only a marginal increase of 2% in total operating expenses. 

With the pride of owning the highest asset base in the country, BoC has grown its total assets by a further 6% to Rs.1.4 trillion as of end June 2015. Loans and advances accounted for 56% of the Bank’s total assets base and gross loans stood at Rs. 837 billion. 

Recovering from the slow credit growth in 2014, the loan book has grown by 8% during the first half of 2015. The investment portfolio also showed an upward movement due to increased investment and treasury activities. 

Deposits accounted for 71% of the Bank’s liabilities as at end June 2015 and showed a marginal increase of 1% compared to the  end 2014 position which is an 8% increase compared to end June 2014. Deposit mix has improved favorably achieving a higher CASA mix (current and savings account to total deposits) of 45% resulting in 437 bp increase on YoY basis.

The Bank’s Return on Average Assets (ROAA) ratio stood at 1.3% and Return on Average Equity (ROAE) ratio stood at 17.3% indicating a slight dip compared to end 2014 mainly due to increased assets base and Rs. 5 billion capital infusion made in December 2014. However, the cost to income ratio has reduced from 44% to 42% indicating improved operational efficiencies.

The Bank’s domestic liquid asset ratio was 30.8% as of end June 2015 while the off-shore liquid asset ratio was 28.9% standing well above the Central Bank’s required benchmark of 20%. The Bank managed to maintain better trade-off between liquidity and interest earning assets. The Bank also continued to sustain CAR by maintaining Tier I at 8.4% and Tier II at 11.9% levels against the Central Bank’s minimum requirements of 5% and 10% respectively.

During the period under review Fitch Ratings Lanka reaffirmed the Bank’s Long Term Issuer Default Rating (IDR) as “BB-”and National Long Term Rating as “AA+ (lka)” stable outlook   in view of the strong domestic funding franchise, which is underpinned by its state linkages, high systemic importance, quasi-sovereign status, role as key lender to the Government and full Government ownership. 

Further, the Bank has created history once again by being ranked among the top five banks in the Asia-Pacific region (excluding China and Japan) in terms of return on capital by ‘The Banker’ magazine, becoming the first Sri Lankan bank to achieve such a performance ranking. This came at a time when, the Bank has been ranked among the Top 1000 Banks in the world with a country rank of No.01, ahead of all other Sri Lankan banks.