People's Bank records Rs. 1.198 billion profit for first half

PEOPLE'S BANK has recorded a pre-tax profit of Rs. 1.198 billion and a post tax profit of Rs. 938 million for the first half of this year, after a Rs. 260 million provision for tax.

The Bank's post-tax profit has surpassed its budgeted target of Rs. 900 million for the first half of 2005.

The results of the Bank as at the half year end reflects a marginal increase in its operational income amounting to Rs. 6.551 billion as against Rs. 6.516 billion in the corresponding period of the previous year.

People's Bank has attributed this to the fact that the prior year performance included Rs. 511 million from Capital Gains arising from the disposal and trading of Treasury Bills and Bonds held at that time.

The Corresponding value is Rs. 250 million, which is Rs. 261 million less than the previous year. In addition, interest expenses reflect an increase of around Rs. 1.1 billion due to the growth of the deposit base from Rs.163 billion at the end of June 2004 to Rs. 194.8 billion at the end of June 2005, which is a growth of approximately Rs. 31.8 billion.

The expenditure platform of the Bank has also increased by Rs. 235 million against the comparative period of the previous year. This is a 5% increase over the previous half year.

This is due mainly to the increased funding level by the Bank of its Staff Pension Fund, based on an Actuarial valuation at the end of 2004. The Actuarial valuation required the Bank to increase its funding level from 30% of attributable staff costs to 50%.

The first half of 2005 reflected the Pension Provision at 50% as against a 30% in the previous year. In addition, to the reduced income levels from Capital Gains the Bank has also made a provision of Rs. 97 million for the fall in value of its dealing securities as at the end of June 2005.

A review of the Bank's Balance Sheet indicates a significant growth in customer deposits during the first half of 2005, to Rs. 194.8 billion, up from Rs. 185.6 billion as at the end of last year, reflecting the continuing confidence of depositors across Sri Lanka.

The Bank's Balance Sheet has grown on the assets side primarily due to investments in Treasury Bills and Bonds for maintenance of the statutorily required Liquid Asset levels.

During the period under review, the Bank completed the implementation of the first phase of its new Core Banking platform.

The first phase included the installation of the new system at its Headoffice, its Headquarters Branch and branches at Union Place, Battaramulla, Homagama and Avissawella, the Corporate Banking Unit and the Overseas Customer Services unit. A total of 60 branches will be online by the end of this year.