DFCC Bank nine month profits healthy

The DFCC Bank's non-audited profit after tax for the nine months ended 31 December 2010 (current period) was Rs 6,616 million compared with Rs.1,327 million in the nine months ended December 31, 2009 (previous period), the Bank said yesterday.

This includes an exceptional profit contribution of Rs 5,361 million arising from the reduction of voting ordinary shareholding in Commercial Bank of Ceylon PLC (CBC) to 15 percent from 26.8 percent during June to August 2010. The consolidated profit after tax for the current period was Rs 4,543 million compared with Rs 1,952 million in the previous period. The consolidated profit is lower mainly due to consolidation adjustments arising from CBC ceasing to be an associate company from June 2, 2010. This commentary relates to the performance of the Bank excluding the exceptional profit arising from the sale of CBC shares.

On this basis, the post tax profit of the Bank was Rs 1,255 million in the current period, 5.4 percent lower compared to Rs 1,327 million in the previous period.

At the half year stage the post tax profit of the Bank excluding the impact of the CBC transaction was lower than the post tax profit for the comparative period by 16 percent. The Bank was able to narrow this gap during the third quarter due to significant reduction in non-performing loans and a higher level of recoveries of loans previously provided,a slight improvement in interest margin through liability re-pricing and a lower level of provisioning.

These factors contributed to a profit after tax of Rs 507 million in the third quarter of the current period, an increase of 17 percent over the third quarter in the previous period.

The gross advances of the Bank as at December 31, 2010 amounted to Rs 39,121 million. The gross non-performing loans, advances and leases (NPA) ratio of the Bank was 7.5 percent reduced from the peak of 11.6 percent on June 30, 2010 and lower than 10 percent on 31 March 2010, the end of previous financial year.

The contribution to profit after tax from DVB was Rs 157 million compared with Rs 129 million in the comparable period. This increase was largely due to reversal of specific provision through recoveries.

The contribution to consolidated profit from subsidiaries (other than DVB) and the joint venture company amounted to Rs 19 million in the current period compared to Rs 72 million in the previous period. The previous period included the profit contribution from Lanka Ventures PLC which was a subsidiary in the previous period but is currently a subsidiary of the joint venture company, Acuity Partners (Pvt) Limited (APL). "Our joint venture investment bank APL performed well and contributed Rs 94 million to consolidated after tax profit mainly due to the strong results delivered by its stockbroking subsidiary," DFCC Chief Executive Officer Nihal Fonseka said.