DFCC post consolidated profit for the financial year 2011/12
The DFCC Group posted a consolidated profit after tax of Rs 2,973
million for the financial year 2011/12 from its core business.
This is an increase of 37 percent over Rs 2,170 million recorded in
the previous year. The post tax group profit increased by 22 percent to
Rs 769 million for the quarter ended 31 March 2012.
Picture by Geeth de Mel
“DFCC benefited from the reduced tax rates and apart from the profit
achievement in core business, the outlook is positive. DFCC and DFCC
Vardhana Bank (DVB) operates in an integrated manner providing full
spectrum of banking services with a strategy to aggressively engage in a
customer drive, DFCC Bank Chief Executive Nihal Fonseka said.
“The year 2011 had seen the banking industry both locally and
globally facing a challenging year. It has been a good year for Sri
Lanka during the first half in terms of a 8 percent GDP and a stable
inflation. However, there was overheating in the latter part due to the
widening of BOP and rupee floating resulting in depreciation. Early this
year we saw a ceiling on credit for banks and they operated under
somewhat of a unfavorable economic landscape,” he said.
Commenting on the Group performance, he said that the main
contributing factors to the profit growth were lower loan loss,
provisioning and higher write-backs, due to improved asset quality and
recoveries where the higher non-funds based income and a strong loan
portfolio growth too contributed.
Last year was an important year, as DFCC’s almost wholly- owned
(99.1%) subsidiary, DFCC Vardhana Bank (DVB) increased its focus on the
top end corporate sector for working capital and trade finance as well
as the Personal Financial Services (PFS) segment.
DFCC Bank tapped wholesale deposits to supplement its funding base
while DVB launched several deposit products to cater to personal
customers to their life cycles.
Total customer deposits of the Group increased 75% to Rs 44,420
million from Rs 25,416 million a year earlier.
An investment was made to establish the DFCC brand to support PFS
initiative through a major promotional campaign via the award winning
knowledge quiz programme “DFCC Mindstar” on national television.
An initial outcome of these efforts was the increase of the PFS asset
portfolio to Rs 4,200 million from a base of Rs 900 million a year ago.
The total SME portfolio of DFCC and DVB comprising of loans and
leases increased from Rs 34,991 million to Rs 54,651 million during the
year recording a strong growth of 56 percent from a growth of 29 percent
in the previous year.
“In deciding on our strategic positioning we are conscious that being
a mere follower will not allow us to achieve our corporate vision.
“Technology especially smart phones, tablets and social media has
radically changed the way customers deal with banks and make payments
not only in the developed world, but even in the emerging economies.
“Although branches will continue to be important, how customers will
interact with branches will change significantly and banks will have to
face competition from other delivery channels and disintermediation.
“Our medium strategy will focus on leveraging technology and
developing partnerships not just generating a short term competitive
advantage, but to radically change the way services are delivered to
customers,” Fonseka said.
DFCC and DFCC Vardhana Bank (DVB) continued to expand its operations
by brining its total number of branches and service locations to 127 of
which 72 percent are presently outside the Western province.