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The Commercial Bank of Ceylon has maintained its position as the strongest performer among local private banks in 2001, with a record post-tax profit of more than Rs 1 Billion, in a year the bank describes as "one of the most difficult for the Sri Lankan economy."

Describing the 2001 results as "remarkable" the bank's Chairman Mahendra Amarasuriya told a news conference in Colombo yesterday that the pre-tax profit had grown 15.17 per cent to Rs 1,324.96 million, staying ahead of the inflation rate of 14.2 per cent for the year. Post-tax profits reached Rs 1,009.96 million, another significant achievement in the context of an increase in the bank's tax liability of about Rs 60 million as a result of the 20 per cent tax surcharge imposed by the government, Mr. Amarasuriya said.

"These results were achieved amidst what could be considered as one of the most difficult years for the Sri Lankan economy," he said. "For the first time since independence, the Sri Lankan economy in 2001 recorded a negative GDP growth, estimated to be in the region of minus 0.6 per cent."

The bank's directors had recommended a dividend of 45 percent for the year on the basis of its good performance. The Commercial Bank's share has now become one of the few shares traded at a premium over net asset value on the Colombo Stock Exchange. The bank has the highest market capitalisation among listed banks in Sri Lanka and ranks number three among all listed companies, Mr. Amarasuriya said.

Managing Director Amitha Gooneratne said deposits had grown by 23.41 per cent to Rs 46.305 billion, and advances by 15.78 per cent to Rs 43.437 billion. The industry average for growth in deposits and advances is estimated at 17 per cent and 15.5 per cent respectively, indicating that Commercial Bank has outperformed the industry in these two key indicators.

Among other performance indicators of significance were: net income growth of 18.31 per cent to Rs 3.490 Billion; Net interest income, the main source of income to the bank up 15.64 per cent to Rs 2.335 billion; exchange income growth of 33.91 per cent and a growth of 22.13 per cent in other income. Commercial Bank's cost/income ratio of 55.27 per cent is also considered to be the best among peer banks in Sri Lanka.

Mr. Gooneratne said credit growth was particularly noteworthy, considering the conditions in which it was achieved. "Firstly, adverse economic conditions dampened credit demand in the economy. Secondly, the government's decision to route all funding needs of state corporations exclusively through the state banks impacted adversely on credit growth of the bank," he said.

He also said that the ratio of non-performing loans to total advances had increased marginally from 8.73 per cent at the end of 2000 to 9.95 percent as of December 31, 2001, mainly due to the adverse economic conditions and the total loan portfolio not achieving the anticipated growth. 

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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