DFCC Groups nets Rs 702m profit in 1Q
The DFCC Group recorded a consolidated profit after tax of Rs 702m
for the first quarter ended June 30, 2011 compared with Rs 3,346 m in
the corresponding period of the previous year (comparable period).
|
Nihal Fonseka |
This profit for the comparable period included a one off gain of Rs
2,921 m from the disposal of part of the equity stake in Commercial Bank
of Ceylon PLC (CBC) consequent to which CBC ceased to be an associate
company on June 2, 2010. After adjusting for this one off gain, the
consolidated profit after tax recorded an increase of 65 percent. In
this context it is also relevant that the comparable period included a
contribution of Rs 193 m as the equity accounted profit of CBC.
Apart from the Banking Business which is analysed below, the
investment banking joint venture, Acuity Partners (Pvt) Ltd, made a
significantly higher contribution of Rs 52m to consolidated profit
compared with Rs 15m in the comparable period. The stock broking
business recorded strong growth and Acuity also managed several
successful private placements and IPOs.
The Banking Business of the DFCC Group is undertaken by DFCC Bank (DFCC),
a licensed specialized bank and 99 percent owned subsidiary DFCC
Vardhana Bank (DVB), a licensed commercial bank.
In April 2011, Central Bank of Sri Lanka (CBSL) has granted
permission for DFCC to own up to 100 percent of DVB and to functionally
manage it and as such it is useful to analyse the consolidated
performance of the two banks as DFCC Banking Business (DBB). A
consolidated Income statement for DBB has been released to the Colombo
Stock Exchange as supplementary financial information.
This statement was derived from the interim financial statements with
certain adjustments for ease of analysis. These adjustments relate to
excluding the one off exceptional profit in the comparable period
referred to earlier and treating CBC as if it was not an associate
company during the comparable period.
Since the financial year of DVB ends in December, the accounts of DVB
are consolidated with a three month lag.
The high level of liquidity that prevailed during the reporting
period and the resultant competition brought interest margin under
pressure and net interest income of Rs 1,110m was 9 percent lower than
in the comparable period despite year on year growth of 29 percent in
the gross loans and advances portfolio to Rs 67,277m. |
