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By Shirajiv Sirimane

The Commercial Bank of Ceylon Ltd outperformed industry averages in 2002 to reinforce its position as one of the best performing banks in the country, its chairman Mahendra Amarasuriya said yesterdy.

Releasing its annual results at a news conference, he said the bank's turnover grew by Rs 442 million to Rs 8.1 billion in the year ending December 31, 2002, yielding a pre-tax profit of Rs 1.525 billion, up 15.1 percent. Profit after tax, bolstered by the abolition of the surcharge on income tax, grew 19.2 per cent to Rs 1.204 billion. Total assets at the end of the year stood at Rs 73.3 billion, having grown 24 percent or Rs 14 billion over the year.

Group results were even more impressive, with pre-tax profit up 19.8 percent to Rs 1.704 billion, and post-tax profits growing 25.4 percent to Rs 1.312 billion, he said.

Amarasuriya described these results as very satisfactory in the context of the conditions that impacted on the banking sector during the year. He said the government's policy of reducing interest rates had narrowed interest margins, directly impacting on net interest income, the bank's main income source.

Lower credit demand in the first three quarters of the year had saddled banks with excess liquidity. A relatively stable exchange rate had impacted on translation gains, the second largest source of revenue, while international developments had kept interest margins on foreign currency deposits down.

Despite these factors, Amarasuriya said the bank had increased deposits by Rs 8.2 billion, up 17.8 per cent to Rs 54.5 billion, and net advances by 27.8 percent to Rs 51.7 billion. The bank had also continued to maintain its key finance ratios such as capital adequacy, return on assets and cost income ratio as the best in the industry, he said.

Bank to pay Rs, 200 million as VAT

Amarasuriya said that the bank would pay nearly Rs. 200 million as VAT on salaries of their employees to the government by the end of this year. "Last year we paid in excess of Rs. 300 million as salaries for our staff which is over 3,000."

The Chairman said that the Bank is not in a position to take this expenditure from the customers and hence this will definitely have an impact on their profit margins.

He said that he hopes VAT would not be introduced to other companies involved in the Service sector. "If this happens these companies will take it from the customers."

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Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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