ComBank ends 1Q as first private sector banking group on cusp of Rs. 3 t assets milestone

 Chairman Sharhan Muhseen (left) and Managing Director/CEO Sanath Manatunge

• Loan book grows by Rs. 116.75 b in three months to Rs. 1.642 t
• Net interest income up 23.53% to Rs. 34.21 b
• Improves provision cover and interest margin alongside balance sheet growth 
• Reports three-month PBT of 
• Rs. 22.56 b and PAT of Rs. 14.97 b, with taxes amounting to Rs. 11.61 b

The Commercial Bank of Ceylon Group said yesterday it has made a characteristically strong start to 2025, recording healthy profit and balance sheet growth in the first quarter of the year.

Comprising of Sri Lanka’s largest private sector bank, its subsidiaries, and an associate, the Group reported in a filing with the Colombo Stock Exchange (CSE) that assets reached Rs. 2.999 trillion as at 31 March 2025.

Gross income for the quarter grew by 9.85% to Rs. 88.10 billion, while interest income improved by 3.14% to Rs. 72.60 billion. Interest expenses reduced by 10.09% to Rs. 38.38 billion as a result of repricing of liabilities amidst the lower rates regime that prevailed, generating a 23.53% growth in net interest income, which amounted to Rs. 34.21 billion for the three months reviewed.

Total operating income grew by 33.40% to Rs. 46.62 billion, but the Group’s provision for impairment charges and other losses was increased by 110.44% to Rs. 7.23 billion, with additional provisions made on a prudential basis for individually-significant customers, which resulted in an improvement in the bank’s impaired loans (Stage 3) ratio.

Consequently, net operating income for the three months, at Rs. 39.39 billion, reflected a growth of 25%, while the Group’s ability to keep operating expenses down to Rs. 12.80 billion, an increase of just 6.20%, resulted in operating profit before taxes on financial services improving by 36.64% to Rs. 26.59 billion.

Taxes on financial services increased by 48.18% to Rs. 4.03 billion resulting in a Group Profit Before Tax (PBT) of Rs. 22.56 billion for the three months, an improvement of 34.77%. With income tax increasing by 27.92% to Rs. 7.58 billion, the Group reported a net profit of Rs. 14.97 billion for the quarter reviewed, reflecting a bottom-line growth of 38.52%.

Taken separately, Commercial Bank of Ceylon PLC reported a PBT of Rs. 21.88 billion and Profit After Tax (PAT) of Rs. 14.50 billion for the three months, posting growths of 35.10% and 38.71%, respectively.

Commercial Bank Chairman Sharhan Muhseen said: “The Group has performed exceptionally well in the first quarter of the year, and it’s not just in terms of business volumes. While nearing the milestone of Rs. 3 trillion in assets – a first for a private sector banking group – is a significant achievement, it is equally noteworthy that the bank’s impaired loans (Stage 3) ratio has declined and net interest margin has improved in tandem with balance sheet growth.”

Commercial Bank Managing Director/CEO Sanath Manatunge noted that the Group had achieved substantial growth in its loan book in the first quarter, continuing the trend of 2024, had reversed a net loss of Rs. 1.9 billion on trading incurred in the corresponding quarter of the previous year, nearly tripled net other operating income, and continued to maintain the best Current Account Savings Account (CASA) ratio despite greater demand for fixed deposits.

“These demonstrate our attention to diverse aspects of our business, all of which have contributed to our robust first quarter results, while building resilience for future growth,” he said.

Total assets of the Group increased by Rs. 122.85 billion or 4.27% over the three months under review to reach Rs. 2.999 trillion as at 31 March 2025. The Group ended the quarter with gross loans and advances of Rs. 1.642 trillion, a growth of Rs. 116.75 billion or 7.65% over three months, at a monthly average of Rs. 38.92 billion. Loan book growth over the preceding 12 months was Rs. 326.02 billion, with a year-on-year (YoY) growth of 24.77%, averaging Rs. 27.17 billion per month. 

Meanwhile, deposits grew by Rs. 105.82 billion or 4.59% to Rs. 2.412 trillion in the three months reviewed, reflecting an average monthly growth of Rs. 35.27 billion, and YoY growth of 12.67%, with a monthly average growth of Rs. 22.60 billion over 12 months.

In key performance ratios, the CASA ratio of the bank improved to 39.51% as at 31 March 2025, from 38.07% at end December 2024, and consistently remains one of the best in the industry, the bank said.

The bank’s Tier 1 Capital Ratio as at 31 March 2025 was 14.276% post growth in risk-weighted assets in its balance sheet, while its Total Capital Ratio stood at 18.014%. Both ratios are comfortably above the regulatory minimum ratios of 10% and 14%, respectively, and the bank has already announced the first Tier 2 Green Bond by a bank in Sri Lanka to further strengthen the regulatory capital.

Meanwhile, the bank’s liquidity coverage ratio for the quarter reviewed stood at 539.62% for Rupees and 345.42% for all currencies, both well over the statutory minimum ratios of 100%. The bank’s net stable funding ratio stood at 181.23% as at 31 March 2025, nearly double the minimum statutory requirement of 100%.

In terms of profitability, the bank’s net interest margin increased to 4.74% for the quarter, compared to 4.27% reported for 2024 and 4.22% a year ago. The bank’s return on assets (before tax) improved to 3.12% compared to 2.54% a year ago, while return on equity improved to 21.29% from 19.53% for the corresponding quarter of the preceding year.

The bank’s cost to income ratio excluding taxes on financial services stood at 27.17%, as against the normalised ratio of 33.85% for 2024, while the figure inclusive of taxes on financial services was 36.00% for the quarter, in comparison with 41.89% for the preceding year, when the effect of the net loss on the restructuring of Sri Lanka International Sovereign Bonds (SLISBs) is discounted. 

In terms of asset quality, the bank’s impaired loans (Stage 3) ratio improved to 2.58% compared to 2.76% at end 2024 and 5.59% a year ago, while its impairment (Stage 3) to Stage 3 loans ratio further improved to 65.56% from 64.61% as at 31 December 2024 and 44.60% as at 31 March 2024.