Good 1Q growth at Commercial Bank

The Commercial Bank Group, its subsidiaries and associate companies, has reported satisfactory growth in key performance indicators in the first quarter of 2005, despite the adverse effects on its exchange profits by the post-tsunami appreciation of the Rupee against the US Dollar.

In results released to the Colombo Stock Exchange last Friday the Group said its first quarter income of Rs 3.271 billion represented a significant growth of 30.48 per cent or Rs 764.1 million over the corresponding quarter of 2004.

The Group's pre-tax profit of Rs 581.3 million was up Rs 76.3 million or 15.11 per cent, while post-tax profit grew 9.15 per cent to Rs 348.5 million.

Profit growth was adversely affected by an exchange loss of Rs 44.8 million the Group was compelled to absorb in the period under review. In contrast, the Group posted an exchange profit of Rs 170.1 million in the first quarter of the previous year.

Commercial Bank's Senior Deputy General Manager (Finance and Planning) Ranjit Samaranayake said this unusual exchange loss was due to the rapid appreciation of the Sri Lanka Rupee against the US Dollar following the inflow of foreign funds to the country after the tsunami.

The Sri Lanka Rupee appreciated against the US Dollar from Rs. 104.45 as at December 31, 2004 to Rs. 99.70 by March 31, 2005.

As a result, the Group also sustained a translation loss of Rs 253.3 million on the retained profits kept in US Dollars in the bank's Off-shore Banking Centre as well as in the conversion of the accounts of its Bangladesh operations into Sri Lanka Rupees via US Dollars, Samaranayake said.

"We did anticipate this situation and made a disclosure about possible translation losses in our Annual Report for 2004," he said.

"The good news for shareholders is that we have absorbed the full impact in the quarter under review of the translation losses from the adverse cross currency movements, arising from the tsunami effect," he said.