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ComBank first private bank to cross Rs 10 bn NP mark

The Commercial Bank of Ceylon PLC has established yet another performance milestone, becoming the first private bank in Sri Lanka to surpass Rs 10 billion in net profit, following a solid all-round 2012 performance that the Bank dedicates primarily to its customers.

Dinesh Weerakkody, Ravi Dias

Profit before tax for the 12 months ending December 31, 2012 grew 30.26% to Rs 14.311 billion, while profit after tax at Rs 10.072 billion reflected a growth of 25.15%, Sri Lanka's largest private bank said in a filing with the Colombo Stock Exchange.

Commercial Bank Chairman Dinesh Weerakkody said the bank’s financial results reflect the significant role it now plays in the lives of millions of people and the national economy, as well as its commitment to the concept of ‘Banking on You.’

Commenting on the Bank's 2012 performance, Weerakkody said “ The Bank's stellar performance this year amply demonstrates the ‘value’ of long standing relationships that the bank has built over the years. Many Sri Lankans are stakeholders of the bank given the bank's wide geographical spread and the large customer base cutting across every stratum of society.”

Commercial Bank's Managing Director and CEO Ravi Dias said “Our aim has always been to focus on our fundamentals strengthening the balance sheet, ensuring stability and maintaining a strong current and savings account base, which at current levels is probably the best in the industry.” The bank's total income for 2012 improved by 38.88% to Rs 63.167 billion, with interest Income increasing 37.72% to Rs 51.838 billion and non-interest income composed of foreign exchange & other income, growing by 47.62% to Rs 9.729 billion.

Interest income from loans and advances grew by 45.35% to Rs 41.711 billion.

The bank's total performing loans and advances increased by Rs 48.824 billion or 17.94% over the 12 months. Interest Income from Other Interest Earning Assets such as Treasury Bills and Bonds improved by 13.26% to Rs 10.128 billion. With the bank's deposits portfolio growing by Rs 64.262 billion or 20.18%, interest expenses grew by 52.31% in the review period to Rs 29.918 billion.

Consequently, Net Interest Income increased by 21.80% to Rs 21.920 billion. The growth in non-interest income was attributable principally to increased foreign exchange income. A high volume of Treasury operations and translation gains generated foreign exchange income of Rs 4.752 billion, an increase of 104.69%.

Total loans and advances of the bank improved by 17.67% over the 12 months to Rs 338.843 billion at December 31, 2012. This growth was carefully managed by the bank in keeping with the guidelines stipulated by the Central Bank of Sri Lanka, Commercial Bank’s Chief Financial Officer Nandika Buddhipala said.

The bank’s total deposits stood at Rs 382.723 billion at December 31, 2012.Total assets of the bank crossed the Rs 500 billion milestone during the year to Rs 510.75 billion, reflecting a growth of 15.79%. Commercial Bank is the first private bank in Sri Lanka to exceed Rs 500 billion in assets. The provisioning policy adopted by the bank under which it made additional provisions over and above the minimum level required by the Central Bank resulted in net provisions for bad and doubtful debts increasing to Rs 1.496 billion, Buddhipala disclosed. In addition to this the bank made a general provision of Rs 228 million in the year reviewed.

The Bank’s gross non-performing loans ratio reduced marginally from 3.43% in 2011 to 3.37% in 2012, and its net NPL ratio also improved, from 2.08% to 1.84%. Its Interest margin increased by 15 bps to 4.59% from 4.44% a year previously. Non-interest Expenses increased by 17.03% to Rs 13.858 billion, with staff cost, premises, equipment and establishment charges increasing due to expansion of the branch network and relocation of several branches.

In other key performance indicators, the Bank’s Return on Equity improved to 20.79% while Return on Assets improved to 3.01% before tax and 2.12% after tax. A 10 year subordinated loan of US$ 75 million obtained from the IFC in the first quarter of 2013 would further improve capital adequacy, creating more room for leverage, Buddhipala said. Taken as a Group, the Commercial Bank, its subsidiaries and associates reported a pre-tax profit of Rs 14.332 billion at the end of 2012, representing a growth of 29.49%. Profit after tax for the period increased by 24.25% to Rs 10.058 billion.

 

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