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Commercial Bank of Ceylon and its subsidiaries and associate companies have declared an impressive post tax profit of Rs 1.103 billion for the nine months ended September 30, up Rs 361.5 million or 48.71 per cent over the corresponding period last year.

The Bank said one of the key factors in this high growth was the abolition of the 20 per cent surcharge on corporate tax.

The Group recorded a pre tax profit of Rs 1.324 billion, up Rs 254 million, a growth of 23.76 per cent over the corresponding period last year.

A significant contributor to growth in Group profits was the Bank's subsidiary, Commercial Bank Primary Dealer Ltd. Post tax profits of the Bank reached Rs 951.7 million, up Rs 240.8 million or 33.87 per cent, while gross income totalled Rs 5.901 billion for the period under review. Commercial Bank's Deputy General Manager (Finance and Planning) Ranjith Samaranayake said the Bank was able to maintain an adequate growth in key business areas even though the economy did not perform up to expectations, recording a growth of 18.69 per cent in total deposits and 17.59 per cent in net advances. In addition, the total assets grew by 20.08 per cent to Rs 69.2 billion during the period under review, he said.

"The effective marketing strategies of the Bank and attractive terms offered to customers in an extremely competitive environment facilitated business growth," Samaranayake said.

He said that the Bank's ability to manage interest margins prudently in a scenario in which the lending rates, inter bank money market rates and interest on government securities rapidly declined to stabilize at very low levels, enabled the Bank to improve its profits.

The Bank also continued to maintain strong growth in its fee based and other income recording a growth of 33.31 per cent over the corresponding period last year.

A noteworthy feature of Commercial Bank's performance was that the profit growth was achieved despite a significant drop in exchange profit by 14.14 per cent from lower translation gains during the period under review due to exchange rate fluctuations against the US Dollar being marginal in comparison to the substantial fluctuations of last year, Samaranayake said.

The Bank's shares were traded at Rs 213.00 on September 30 2002, which was much higher than the net asset value of Rs 162.48, he said. "Both net assets per share and the market value per share of the Bank are considerably above the industry averages.

Similarly the Bank recorded an impressive earnings per share of Rs 30.45 for the period under review as against Rs 22.74 for last year," Samaranayake added.

He said that the interest margins and depreciation of the Sri Lankan Rupee against the US Dollar are expected to remain at lower levels during the fourth quarter of the year compared to the corresponding period in 2001.

This will have adverse impact on the growth in the net interest income and exchange profit during the fourth quarter of the year, he said and added "Though the Bank has achieved satisfactory profits up to the third quarter of the year, we would like to view the fourth quarter with cautious optimism."

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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