ComBank ends 1Q with PBT of Rs 3.23 bn
The Commercial Bank of Ceylon PLC has posted profit before tax of Rs
3.23 billion on gross income of Rs 16.77 billion for the three months
ended March 31, 2013, despite the challenges of reduced foreign exchange
income and narrowing margins in the reporting period.
Releasing its first quarterly statement based on new Sri Lanka
Accounting Standards (SLFRS) which are based on International Financial
Reporting Standards (IFRS) for interim accounts, the Bank said foreign
exchange income had declined by Rs 1.47 billion or 65% over the
corresponding quarter of the previous year, due to the appreciation of
the Sri Lanka Rupee against the US dollar during the reporting period as
against a depreciation during the corresponding quarter of the previous
year.
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Dinesh
Weerakkody |
Ravi Dias |
Interest income improved by 24% to Rs 14.487 billion in the period
under review, but interest expenses increased at a higher rate of 44% to
Rs 8.874 billion, exerting pressure on interest margins, the Bank said.
Consequently, the interest margin for the quarter declined to 4.34% from
the 4.85% reported for 2012.
As a result of these factors, the Bank’s profit after tax of Rs 2.241
billion for the three months was lower by Rs 563 million over the first
quarter of 2012.
“The Bank continued its trend of steady growth as reflected by the
increase in deposits and interest earning assets as well as improved
capital adequacy ratios and other key indicators,” Commercial Bank
Chairman, Dinesh Weerakkody said. “The impact of lower translation gains
and income from foreign currency operations on profit was anticipated
following the strengthening of the Rupee commencing the latter part of
2012,” Commercial Bank’s Managing Director/CEO Ravi Dias said. Total
deposits of the Bank grew by Rs 13.570 billion over the three months
since December 2012, surpassing Rs 400 billion to Rs 408.945 billion at
March 31,2013, recording a growth of approximately 4%, while its
interest earning assets too increased by the same percentage, growing by
Rs 15.907 billion to Rs 389.451 billion at the end of the quarter
reviewed. Total assets of the Bank increased by 4.91% to Rs 536.9
billion from Rs 511.7 billion at the end of 2012. The Bank’s Tier I
Capital Adequacy Ratio improved to 12.72% as at March 31, 2013 from
12.64% at December 31, 2012, while total capital adequacy (Tier I and
Tier II) increased to 16.62% from 13.85%, largely due to a sum of US$ 75
million raised by the Bank from the International Finance Corporation
(IFC) as a ten year Subordinated Term Debt that qualifies for Tier II
Capital.
Commercial Bank’s Chief Financial Officer Nandika Buddhipala said the
Bank had made a reversal of Rs 100.654 million in its individual
impairment provisions in the quarter reviewed.
This was mainly due to efforts of the Bank to recover part of such
loans and also due to the reduction in the number of loans considered
for individual impairment during the first quarter of 2013. Collective
impairment provisions had also reduced from Rs 1.258 billion in the
first quarter of last year to Rs 610 million in the reviewed three
months, largely due to a change in the mix of the loans subjected to
collective impairment that was favourable to the Bank. Consequent to
this, the total impairment charges for the period was only Rs. 516.925
million which reflected a drop of Rs 514 million, or an improvement of
49.86% compared to the first quarter 2012.
Total expenses including personnel costs, depreciation, amortisation
and other expenses for the three months was Rs 3.508 billion, an
increase of 7.2%. Taken as a Group, the Commercial Bank, its
subsidiaries and associates posted pre-tax profits of Rs 3.255 billion
for the quarter reviewed. Profit after tax for the three months was Rs
2.257 billion.
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