BOC records Rs. 30 b pre-tax profit in 1Q

Chairman Kavinda de Zoysa (left) and General Manager/CEO Russel Fonseka 

• Continues as largest SME and development banking lending institution 
• Futuristic and client-focused Business Revival and Rehabilitation Unit with industry leading practices
• Total assets reaches milestone of Rs. 5.3 t
• PAT of Rs. 17.1 b
• Total deposit base of Rs. 4.5 t
• Gross loans and advances at Rs. 2.4 t
• Rs. 20.8 b contributed to Govt. as taxes

Bank of Ceylon (BOC) said yesterday it delivered a strong and resilient performance in the first quarter of 2025. Building on the momentum of 2024, the bank maintained financial stability, demonstrated prudent risk management, and remained aligned with national economic priorities in an evolving macroeconomic environment.

General Manager/CEO Russel Fonseka said: “The strength and soundness of the banking sector are critical to sustaining confidence in the financial system. At BOC, we have prudently managed our liquidity and capital positions while consistently supporting vital sectors of the economy. Our financial performance for 1Q 2025, underpinned by a remarkable milestone of Rs. 5.3 trillion in total assets, reflects our resilience and unwavering commitment to growth. This achievement, alongside significant profitability gains, reinforces the bank’s strategic focus and robust financial foundation. Looking ahead, we remain committed to expanding access, driving digital innovation, and reinforcing our leadership as Sri Lanka’s premier financial institution.”

In 1Q 2025, the bank recorded a Profit Before Tax (PBT) of Rs. 30.0 billion, marking a remarkable 222% increase compared to Rs. 9.3 billion in 1Q 2024, driven by robust growth in net interest income (NII) and enhanced operational efficiency. Profit After Tax (PAT) stood at Rs. 17.1 billion, reflecting the bank’s sustained focus on profitability and prudent cost management. 

NII surged to Rs. 50.5 billion, representing a robust 95% year-on-year (YoY) growth, driven by the bank’s effective management of assets and liability pricing amidst a continued easing in policy rates. While interest income rose moderately by 12% YoY to Rs. 121.1 billion, reflecting the impact of the lower interest rate environment, a sharper 15% reduction in interest expenses to Rs. 70.6 billion significantly enhanced net interest margin. This substantial improvement in NII underscores the bank’s strategic agility and sound fund management, enabling it to deliver a strong performance despite the prevailing low interest rate regime.

Net fee and commission income continued to support the bank’s overall profitability in 1Q 2025, recording a 5% YoY increase to Rs. 5.2 billion. This growth was driven by higher transaction volumes in card services, retail banking, and remittance activities, alongside increasing customer engagement with digital banking platforms. The bank’s ongoing digital transformation efforts and focus on delivering value-added services, highlighted by the strong performance of BOC cards offering competitive rewards and discounts, contributed to this steady performance.

The bank maintained its cautious and proactive approach to credit risk management amidst ongoing global and domestic economic challenges. An impairment charge of Rs. 2.9 billion was recognised on loans and advances, reflecting the continued stress in specific sectors. The Stage 3 loan ratio stood at 7.4%, while the Stage 3 provision coverage remained strong at 53.4%, underscoring the bank’s prudent provisioning practices. Strategic overlays and close monitoring of credit exposures enabled timely risk mitigation, helping preserve financial stability. 

The bank’s Business Revival and Rehabilitation Unit played a vital role in supporting operationally viable but financially distressed customers by conducting rigorous evaluations and facilitating access to necessary financing, reinforcing the bank’s commitment to economic recovery and long-term portfolio quality.

The bank delivered a strong financial performance, reporting total operating income of Rs. 57.2 billion with an impressive 88% YoY increase, driven primarily by substantial growth in NII and net fee and commission income. Operating expenses stood at Rs. 16.5 billion, reflecting a 13% increase compared to the corresponding period of the year prior, largely attributable to a 17% rise in personnel costs. Despite the increase in expenses, the bank continued to enhance operational efficiency, as evidenced by an improved cost-to-income ratio of 32.4%.

Operating profit before taxes on financial services reached Rs. 37.9 billion, representing a remarkable 202% increase from the previous year. After accounting for Value Added Tax (VAT) and the Social Security Contribution Levy (SSCL), the Bank reported a PBT of Rs. 30.0 billion, an outstanding 222% YoY growth, underscoring the bank’s resilience and strategic execution amid a challenging environment. Income tax expenses for the quarter amounted to Rs. 12.9 billion, resulting in a PAT of Rs. 17.1 billion. Total tax contributions, including direct and indirect taxes, amounted to Rs. 20.8 billion, reflecting the bank’s significant role in supporting the national economy as a State-owned financial institution. 

Reporting another milestone in the bank’s journey as of 31 March 2025, BOC reported total assets of Rs. 5.3 trillion at the bank level and Rs. 5.4 trillion at the Group level, reflecting a 7% growth from year-end 2024, driven by increased investments in debt instruments and securities under resale agreements. A slight contraction was recorded in gross loans and advances at Rs. 2.4 trillion, mainly due to the appreciation of the Sri Lankan Rupee and muted credit demand. The bank’s deposit base grew by 6% to Rs. 4.5 trillion, highlighting strong customer confidence and effective deposit mobilisation.

BOC continued to deliver strong profitability and operational efficiency in 1Q 2025, with Return on Assets (ROA) before tax improving to 2.33% from 2.28% in 2024, and Return on Equity (ROE) after tax remaining solid at 22.03%, reflecting consistent value generation for shareholders. The net interest margin increased to 3.92% from 3.57%, indicating effective management of interest-earning assets and liabilities. The bank also sustained a strong capital position, with a Common Equity Tier 1 ratio of 11.66% and a Total Capital Ratio of 16.12%, both well above the Basel III requirements. Liquidity coverage ratios stood at 315.00% for local currency and 283.05% for all currencies, reinforcing BOC’s robust liquidity profile and its ability to meet financial obligations even under stressed conditions.

In 1Q 2025, BOC continued to focus on enhancing its digital capabilities to improve customer service and operational efficiency. One of the key initiatives has been the integration of advanced digital platforms, including the launch of the BOC Flex app. This app enables customers to manage their accounts seamlessly, access services, and perform transactions in real-time. Additionally, it supports the bank’s strategy to offer more flexible, scalable, and user-friendly solutions. By incorporating flexible cloud-based technologies like in the Flex app, BOC is positioning itself to meet evolving customer expectations and remain competitive in the rapidly transforming banking sector.

The bank remains dedicated to upholding its high standards of excellence, advancing economic growth, and strengthening its role in promoting a resilient and stable financial system.

Chairman Kavinda de Zoysa said: “As we continue to build on the strong foundation laid by the bank, our focus remains on advancing our leadership in Sri Lanka’s banking sector. We are committed to delivering exceptional customer service, driving digital transformation, and ensuring prudent risk management and strong governance. A key priority is supporting small and medium enterprises (SMEs), including women, youth and tech entrepreneurs, through careful credit analysis and structuring, innovative digital products, and tailored loan solutions, empowering them to thrive in a digital economy. As we look to the future, we are committed to enhancing financial inclusion, expanding our digital offerings, promoting sustainable growth, and fostering economic progress. Business revival continues to be a core focus, aimed at supporting both the industry and our clients. We will continue to invest in our people to support our ambitious growth agenda for the future.”