Turnover up 6.85 percent to Rs 11 billion in 1Q:
ComBank makes prudent start to new fiscal year
The Commercial Bank of Ceylon Group has posted a turnover of Rs
10,982 million in the three months ended March 31, 2009, a growth of
6.85 percent.
In results released to the Colombo Stock Exchange this week,
Commercial Bank of Ceylon PLC, its associates and subsidiaries reported
a profit before tax and financial VAT of Rs 2,150 million, and profit
before tax of Rs 1,635 million. Group Net profit after tax for the
quarter was Rs 892.2 million.
Significant developments in the period reviewed included a suspension
of interest on certain loans by the Bank, as a result of the prevailing
economic situation. This resulted in net interest income declining from
Rs 2,992 million in the first quarter of 2008 to Rs 2,942 million this
year, although total interest income grew by more than 3 percent.
The
Bank said interest expenses had grown by 5.6 percent due to an increase
in volume of deposits and some deposits getting re-priced with a shift
from low cost funds to high cost funds compared to the corresponding
period last year.
Financial VAT had increased by a further 2.1 percent to reach a total
of Rs 515.2 million as a result of increased staff emoluments which are
added back in computing the Financial VAT.
The specific provisions rose by 159 percent to Rs 460.4 million, but
General provisions declined nearly 66 percent to Rs 66.9 million.
Consequently the net provisions increased by 44 percent to Rs 409.8
million.
On the positive side, noteworthy growth was achieved in foreign
exchange profit, from Rs 526.1 million to Rs 983.6 million, an increase
of 86.9 percent as a result of the depreciation of the Rupee and profits
from several forward exchange deals done during the period under review.
Commercial Bank's Chief Financial Officer, Nandika Buddhipala said:
"As expected, the quarter reviewed was one of mixed results, with strong
gains in some areas and declines in others notably a decrease in net
interest income and an increase in provisions made in the interest of
prudence.
We believe the Commercial Bank Group has emerged stronger and better
geared to face what could be a tough year for the banking sector."
He said that Other income had declined by 7.7 percent and stood at Rs
715 million, and non-interest expenses had grown 21.5 percent to Rs
2,081 million. Personnel costs had increased by 27.7 percent following
the conclusion of a new Collective Agreement backdated to January 1,
2009.
All of these factors combined to exert pressure on profit growth and
were responsible for the declines of 6.3 percent in profit before tax
and financial VAT and 12.9 percent in profit after tax, Buddhipala said
but noted that in absolute terms, Commercial Bank remained the most
profitable private local bank in the country.
At Bank level, profit before tax of Rs 1,600 million reflected a drop
of 9.25 percent over the corresponding three months of last year, while
profit after tax of Rs 866.2 million was down by 13.4 percent.
The Group's Total Assets grew by 2.24 percent from Rs 281.6 billion
as at December 31, 2008 to Rs 287.9 billion as at March 31, 2009. Total
deposits of the Group, which stood at Rs 199.9 billion as at December
31, 2008, rose to Rs 204.3 billion as at March 31, 2009 recording a
growth of 2.2 percent.
Gross loans and advances reduced by 2.5 percent from the end of the
preceding quarter to Rs 184.9 billion. Gross Non Performing Loans (NPL)
which stood at Rs 14.1 billion at December 31, 2008 increased 31.2
percent to Rs 18.6 billion at the end of the quarter reviewed.
However, Commercial Bank's Gross and Net NPL ratios at 7.41 percent
and 4.94 percent as at March 31, 2009, remained below the industry
average, Buddhipala said, pointing out that the Group's Capital Adequacy
Ratios were also well above the statutory minimums, with Core Capital
Adequacy Ratio at 10.5 percent and Total Capital Adequacy Ratio at 13.11
percent at the end of the quarter.
Similarly, the Bank's overall Liquidity Ratio at over 25 percent was
well above the minimum statutory requirement of 20 percent.
Buddhipala said that with effect from January 2009, the Commercial
Bank had adopted hedge accounting in line with international best
practice. |