COLOMBO: State-owned banking giant Bank of Ceylon (BoC) saw its net profit for the March quarter (1Q15) growing 8.7 percent year-on-year (YoY) to Rs.2.8 billion on the back of sharp top line gains, the interim financial accounts released to the Colombo Stock Exchange showed.
“Return on equity at group level also fell to 13.5 percent from 18.85 percent”
The group net interest income rose 31.3 percent YoY to Rs.11.6 billion, owing to a steep 15 percent YoY drop in interest expenses to Rs.19 billion, amid lower interest rates. The interest income edged down 0.4 percent YoY to Rs.27.9 billion.
Return on equity at group level also fell to 13.5 percent from 18.85 percent.
Despite a slight reduction in interest income, the loan book of the group grew sharply during the quarter. The banking group loaned Rs.64 billion during the three months, recording a growth of 8.4 percent from December 31, 2014.
Accordingly, on average, BoC had loaned over Rs.21 billion for a month during the quarter under review.
The deposits however fell during the quarter by 2.1 percent YoY to Rs.923.8 billion. This may have exerted pressure on the bank’s capital base, as both Tier I and Tier II capital adequacy ratios fell to 8.64 percent and 12.42 percent, respectively.
However, they remain above the regulatory capital requirements of 5 percent and 10 percent.
The statutory liquid assets ratio of the domestic banking unit also came down to 26.61 percent from 30.78 percent. The regulatory minimum is 20 percent.
In 2012, BoC’s capital adequacy came under stress due to rapid expansion of its loan book and since 2013 the bank has been seeking fresh capital infusion from the national treasury, its sole shareholder.
The net fee and commission income of the banking group during the quarter under review surged 31 percent YoY to Rs.2.3 billion.
However, gains from trading income halved to Rs.505 million while gains from financial investments such as government securities fell a sharp 96 percent YoY to Rs.70 million.
The bank provided Rs.4.1 billion for the loan losses during the quarter under review, up 18.1 percent YoY, with collective impairments of Rs.3.65 billion.
The asset quality of the bank remained relatively poor compared with the industry peers, as the gross non-performing advances ratio deteriorated to 4.39 percent from Rs.3.78 percent from December 31, 2014.
The total assets of the group rose 4.6 percent from December 31, 2014 to Rs.1.42 trillion.
