ComBank profit tops Rs 1.7 b in 1Q 2008
A healthy growth in net interest income in the first quarter of 2008
has enabled the Commercial Bank Group to weather anticipated tougher
market conditions and maintain growth momentum, the bank said yesterday.
The Group comprising Commercial Bank of Ceylon PLC, its associates
and subsidiaries has reported a pre tax profit of Rs 1,794.1 million for
the three months ended March 31, 2008, a growth of 13.7 per cent over
the first quarter of 2007. Post tax profit for the quarter, at Rs
1,025.2 million was up by 11.4 per cent.
The Bank said tax on profit on ordinary activities of Rs. 548.6
million published in the first quarter results of last year, has been
re-stated as Rs. 657.9 million in the comparative column of the Income
Statement of 2007.
This was due to reversal of a deferred tax asset recognised on
statutory general provisions made as per the new provisioning
requirements of the Central Bank of Sri Lanka in the first quarter of
2007, which was subsequently reversed in preparing the Annual Report of
the Bank in 2007.
If the restatement of the tax on profit on ordinary activities was
not effected, the profit after tax for the first quarter of 2007 would
have been Rs. 1,029.2 million.
Results released to the Colombo Stock Exchange revealed the Group's
growth was achieved amidst certain sector-specific provisioning for bad
and doubtful debts, a 64.0 per cent increase in general provisioning on
performing and overdue loans and advances as stipulated by provisioning
requirements of the Central Bank of Sri Lanka and a near 40 per cent
increase in VAT on Financial Services in the quarter under review.
Non-interest expenses of the Group recorded an increase of Rs 265.9
million or 18.37 percent over the corresponding quarter of 2007.
The increase in VAT on Financial Services alone amounted to Rs 143.5
million, of which Rs 84.1 million was consequent to the adoption of a
revised method of computation, Commercial Bank's Chief Financial Officer
Nandika Buddhipala said.
Discounting the effect of the latter, the growth of Group profit
after tax would have been 20.5 per cent, which could be considered
noteworthy in the context of the conditions under which it was achieved,
On the positive side, principal contributors to the Group's bottom
line in the quarter reviewed included a 23.0 per cent growth in Net
Interest Income from Rs 2.43 billion in the first quarter of 2007 to Rs
Other Income grew by 20.6 per cent to Rs 774.7 million mainly due to
growth in fee based income of the Bank while Exchange Income was up 38
per cent to Rs 526 million mainly due to higher gains realised from
forward foreign exchange deals carried out in 2008.