ComBank weathers adverse first quarter profits

Bank restructures loans to help customers:

Hiran H. Senewiratne

Commercial Bank of Sri Lanka’s first quarter profits have gone down compared to the corresponding year (2007) due to the tough market conditions, Chairman Mahendra Amarasuriya told Daily News.

He said that most of the companies especially condominium companies have halted and abandoned their projects and this has eaten into their profits compared to last year’s first quarter results.

Therefore, the Bank is now in the process of revamping and rescheduling some of those loans to help their customers.

During the recent past, several condominium and other development projects have been halted due to the current economic condition in the country. However due to that many banks and other financial service providers are affected by their profits.

However, Commercial Bank’s pre-tax profit topped Rs 1.7 billion in 1Q 2008, which is a healthy growth in net interest income in the first quarter of 2008. This enabled the Commercial Bank Group to weather anticipated tougher market conditions and maintain its growth momentum

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 were not effected, the profit after tax for the first quarter of 2007 would have been Rs. 1,029.2 million.

Total deposits of the Group, which stood at Rs 183.1 billion as at December 31, 2007, rose to Rs 186.1 billion as at March 31, 2008 recording a growth of 1.64 percent.

The total gross loans and advances of the Group rose to Rs 185.2 billion as at March 31, 2008 from Rs 181.1 billion as at December 31, 2007 recording a growth of 2.3 percent.