COLOMBO: The Commercial Bank of Ceylon has extended its growth momentum into the second quarter of the year to record robust performance indicators for the six months ending 30th June 2016 amidst increasing costs of funds and shrinking margins.
Sri Lanka’s benchmark private bank has reported profit before VAT and NBT of Rs 10.391 billion recording a growth of 18.91% for the six month period on Gross Income of Rs 42.935 billion, which reflected an improvement of 18.46% over the corresponding six months of last year.
Profit before tax at Rs 8.895 billion for the half year reviewed was up 19.51%, while profit after tax grew by 25.54% to Rs 6.488 billion, the Bank said in a filing with the Colombo Stock Exchange.
Interest income improved by Rs 5.673 billion or 17.84% to Rs 37.461 billion helped by strong growth of the loan book, but the higher cost of funds, particularly time deposits, resulted in interest expenses rising by 25.44% to Rs 21.350 billion in the six months under review, the Bank said. Consequently, net interest income grew by 9.10% to Rs 16.111 billion.
An improvement in the quality of the loan book enabled the Bank to reduce its total impairment charges by a noteworthy 17.55% to Rs 1.546 billion. The total operating income improved to Rs 20.982 billion, a growth of Rs 2.189 billion or 11.65% while the net operating income increased by 14.88% to Rs 19.436 billion.
“The results for the first six months of the year are pleasing, especially in the context of the changes taking place in the market and the regulatory environment,” Commercial Bank chairman Dharma Dheerasinghe said. “Banks have had to make certain policy adjustments in the review period to accommodate some of these changes, but Commercial Bank’s strong fundamentals make it resilient to such vagaries.”
Commercial Bank Managing Director/CEO Jegan Durairatnam said the review period was one of low liquidity in the industry and reducing margins for the Bank. “The growth achieved despite these factors is attributed to the operational strength of the institution,” he said.
Total assets of the Bank increased by a respectable Rs 50.569 billion or 5.75% since end December 2015 to stand at Rs 930.374 billion as at 30th June 2016. Growth over the 12 months since end June last year was Rs 116.533 billion or 14.32%.
Loans and receivables from customers totalled Rs 569.913 billion, following a growth of Rs 43.746 billion or 8.31% over the preceding six months, at an average of more than Rs 7 billion per month. Total deposits grew by an even higher average of Rs 9.325 billion per month since December 2015 to reach Rs 680.057 billion at the end of the second quarter, reflecting growth of 8.97%.
