ComBank breaks Rs five b
Solid loan book growth and noteworthy improvements in most key
indicators have contributed to Commercial Bank of Ceylon PLC attaining a
major banking sector performance landmark in the year ending December
Commercial Bank Managing Director Amitha Gooneratne
According to financial statements filed with the Colombo Stock
Exchange, the bank crossed the Rs five billion mark in profit after tax
during the year to end FY 2010 with a net profit of Rs 5.523 billion,
achieving a growth of 28.3 percent over 2009.
The bank's profit before tax grew by a healthy 29.5 percent to Rs
9.317 billion, an increase of more than Rs two billion in the year
A welcome resurgence in credit demand and a drop in non-performing
advances in absolute terms helped achieve this growth by facilitating a
32.2 percent (Rs four billion) improvement in net interest income, from
Rs 12.41 billion to Rs 16.41 billion, the bank said. Loan book growth
also contributed to an increase of 27.3 percent in fee and commission
income. Total operating income of the bank recorded a 14.7 percent
growth to Rs 23.193 billion, despite a steep drop in interest rates.
There was, however, a decrease in other income, largely as a result of a
drop in capital gains from the sale of treasury bills and bonds compared
to the previous year, and a 41.2 percent reduction in the exchange
profit of the bank due to the appreciation of the Rupee against the US
Dollar in 2010.
On the strength of these results, the Board of Directors of
Commercial Bank PLC has proposed a final dividend of Rs four per share,
made up of Rs two in cash and Rs two in the form of a scrip dividend,
taking total dividend per share for the year to Rs seven. The bank paid
two interim dividends of Rs 1.50 each earlier in the year.
This is the third year running that the Commercial Bank has declared
annual dividends of Rs seven per share, the highest in the local banking
The maintenance of the Bank's dividend rate subsequent to a one for
two share split that created 125 million new shares in June 2010 means
that the dividend rate in terms of the previous shareholding amounts to
Rs 10.50 per share.
Commercial Bank Managing Director Amitha Gooneratne said practically
every ratio had improved substantially.
"Most noteworthy to shareholders would be the increase in the return
on average shareholder funds, which at 17.9 per cent, is very much
higher than the yield on treasury bills," he said.
Gooneratne said, deposits improved by Rs 25 billion or 10.7 per cent
to Rs 259.779 billion at December 31, 2010. Gross loans and advances
increased by Rs 45 billion to Rs 228.373 billion, a growth of more than
Total assets of the bank grew by Rs 47 billion in the 12 months to Rs
370 billion at the end of the year.
A noteworthy aspect of the bank's loan book growth was the
improvement in performing loans and the simultaneous reduction in
Total provisions for loan losses decreased by 22.3 percent (Rs 342
million) to Rs 1.192 billion in the period reviewed.
This was facilitated by a drop of Rs 469 million in specific
provisions on loans and advances. However, statutory general provisions
on performing and special-mentioned loans and advances increased by Rs
145 million due to the growth in the loan book, notwithstanding the
decrease in the provisioning requirement from one percent to 0.9 percent
in the last quarter of the year.
Non-performing loans, net of interest in suspense, reduced by Rs 2.7
billion to Rs 9.369 billion, giving the bank a net NPL ratio of 4.22
percent, one of the best in the industry, Gooneratne said. The Bank's
net NPL ratio at the end of 2009 was 6.84 percent.