DFCC Vardhana Bank records profits in first half

The Commercial Banking arm of the DFCC Bank, The DFCC Vardhana Bank (DVB) released its interim financial statements for the six months ended June 30, 2005.

The comparison of the financial statements for the similar period in 2004 shows a significant growth and a remarkable resurgence in all financial indicators.

The most significant achievement in the financial statements is that the DVB has been able to turn its bottom line to a positive figure from a negative figure of Rs. 20 Million recorded in June 2004. The DVB recorded a profit (After Tax) of Rs. 23.14 Million for the 6 months ended 30th June 2005.

The prudent credit policies enabled a 42% growth in the loan book whilst recording a reduction of 8% in the provision for credit losses. And a growth of 38% was seen in the total assets. The deposit base grew by 50% exceeding Rs 4000 million mark, and the growth of the total liabilities was 40%.

A reduction of 13% in the Banks premises and establishment expenses was made possible through the sharing of the infrastructure facilities of the parent company. In spite of the 59% increase in the personnel costs, the DVB managed to curtail the increase in the operating expenses at 40%.

The staff strength of the DVB has grown to 106 from 68 recorded in June last year.

This dedicated team, which comprises of veteran bankers and the energetic newcomers, enabled the bank to introduce best practices and to deliver an efficient and customer focused service, which in turn contributed to the growth of the Bank.

In April 2005, the DVB moved its head office to the present Building at 73, W. A. D. Ramanayake Mawatha, Colombo 2. The information technology infrastructure of the Bank is being completely overhauled and full migration to the new platform is expected in the near future.

With the opening of its newest branch at Borella, the DVB now has 12 branches in operation covering all major regions geographically. Also there are ten V-Tell [T2] machines operating at strategic locations offering 24 hour banking thus expanding the coverage of our services.

In September, 2004 Fitch Ratings Lanka Ltd assigned a AA-(sri) national long term rating for the implied long-term unsecured senior debt of DFCC Vardhana Bank. AA- (sri) rating indicates that there is a very low expectation of credit risk. This is one of the best ratings assigned to private commercial banks in Sri Lanka by the rating agency.

In response to a recent Central Bank decision to increase the minimum capital requirement of commercial banks, Vardhana bank has already initiated action to increase its equity base.

The first tranche of Rs. 500 mn infusion of new equity will be made during the September through a rights issue for which the parent company has already consented.