Com Bank posts growth

Commercial Bank Group comprising Sri Lanka’s benchmark private sector bank, its associates and subsidiaries has reported a pre tax profit of Rs. 5,549.7 million for the first three quarters of the year, a growth of Rs 229.5 million or 4.31 per cent over the corresponding period in 2007.

In results released to the Colombo Stock Exchange, the Group said post-tax profit for same period amounted to Rs. 3,056.5 million, recording a marginal growth of Rs 4.9 million or 0.16 per cent.

Commenting on these results, Commercial Bank’s Chief Financial Officer Nandika Buddhipala said that higher provisioning for debt, a slower growth in the advances portfolio and a noteworthy increase in financial VAT had slowed profit growth for the Commercial Bank Group, despite solid performances in some indicators in the nine months ended September 30, 2008.

Gross provisioning for bad and doubtful debts, including the statutory general provisions was increased to Rs 1.689 billion in the period reviewed as against Rs 1.191 billion in the corresponding nine months last year, he said. The general provision on performing and overdue loans and advances as mandated by the Central Bank included in the total gross provisions amounted to Rs. 431.2 million.

Financial VAT increased by Rs 437 million to Rs 1.611 billion, while interest expenses grew by 34 per cent. The main reason for the increase in financial VAT is the change in the basis of the calculation from the basis that prevailed during the corresponding period in 2007, Buddhipala explained.

Total deposits of the Group, which stood at Rs 183.1 billion as at December 31, 2007 rose to Rs 195.8 billion as at September 30, 2008, recording a growth of Rs 12.7 billion, or 6.94 per cent, a reasonable growth given the size of the base and the prevailing conditions, he said.

However, gross advances of the Group recorded a slower growth of 3.05 per cent from Rs 181.1 billion as at December 31, 2007 to Rs. 186.6 billion at the end of the nine months reviewed. “The prevailing inflationary situation and high interest rate regime have impacted on the growth trend of the advances of the Bank,” Buddhipala said.

On the positive side, net interest income of the Group rose by Rs 822 million or 9.64 per cent, while Other Income at Rs 2,687.4 million recorded an increase of Rs. 670.9 million or 33.27 per cent, primarily due to profits from the sale of investment in shares of Commercial Leasing Company.