Bank of Ceylon records Rs. 985m profit in first half

Bank of Ceylon (BoC) recorded a 19% increase in pre-tax profits for the first half of 2005. Last year (2004) for the same period the pre-tax profit was Rs. 1.094 billion. This year saw an improvement to Rs. 1.303 billion - an increase of approximately 19%.

Increases in income tax payable resulted in a net profit after tax of Rs. 985 million which was constant as for the same period last year. Besides the increase in pre-tax profit net interest income increased from Rs. 3.8 billion to Rs. 4.4 billion - an increase of 20% over the same period.

However non interest income fell by Rs. 1 billion as a result of the strengthening of the rupee and the lack of opportunity to take capital gains in the fixed income market due to the increasing interest rate scenario.

The bank's commitment to the staff to ensure that the deficit in the pension funds is closed within a time frame acceptable to the actuarial and auditors also continues to adversely affect operating expense.

Contribution to the pension funds increased by Rs. 282 million to 952 million. Commenting on the bank's pre-tax profits, BoC's General Manager S. N. P. Palihena expressed satisfaction with the results and stated that he was confident that this excellent performance will form the basis for stronger progress over the remaining period of this fiscal year.

Palihena announced a new initiative by which all quarterly financial reports will be certified by external auditors prior to their release. This came into effect with the results being announced and will be in addition to the normal annual audit.

These procedures form part of the bank's on-going programme to strengthen corporate governance and transparency.

Palihena said that there was continued improvement in asset quality of the bank's loan portfolio since NPA had reduced to 8.76% compared with 12.68% during the same period last year.

The improved scenario is a result of a stronger recovery of Non-Performing Advances, as recoveries increased to Rs. 812 million in comparison to Rs. 590 million, which was recovered in the same period last year.