- 9-month gross income up 11% to Rs 112.359 billion
- Pays Rs 10.7 billion as taxes for 9 months
- Records net profit growth of 21.2% for Q3 2019
Significant improvements in the third quarter, which positively impacted its year-to-date performance, have enabled the Commercial Bank Group to post creditable results for the nine months ended 30th September 2019.
Comprising of Commercial Bank of Ceylon PLC, its subsidiaries and associates, the Group reported operating profit before taxes on financial services of Rs 22.211 billion for the period, converting a decline of 3.31% at the end of June 2019 to a growth of 2.27% at the end of September 2019.
Operating profit before taxes on financial services for the third quarter alone amounted to Rs 8.262 billion, reflecting healthy growth of 13.33% over the corresponding three months of 2018, and a noteworthy improvement over the 1.53% decline recorded for the first half of the year.
With taxes on financial services for the nine months growing by a hefty 42.88% to Rs 5.476 billion, which included a mammoth Rs 1.840 billion as debt repayment levy (DRL); group profit before income tax (PBT) reduced by 6.41% to Rs 16.745 billion, but reflected a striking improvement over the 12.65% decline reported at the end of June 2019. PBT for the quarter increased by 5.83% to Rs 6.395 billion.
Mirroring a similar trend, profit after income tax (PAT) for the nine months of Rs 11.518 billion was down by 4.2%, a significant improvement over the 16.85% decline recorded for the first half of the year, while PAT for the quarter was up by an impressive 21.21% to Rs 4.846 billion, the Bank said.
The Group paid out a total of Rs 10.703 billion in taxes for the nine months reviewed.
Commenting on these results, Commercial Bank Chairman Mr Dharma Dheerasinghe said: “Conditions continue to be adverse for banking, and the country’s busy political agenda indicates that the business environment will remain unsettled for a while. It is encouraging however, to note from our third quarter performance that the Bank is adapting better than most of its peers to the challenges.”
Commercial Bank Managing Director Mr S. Renganathan elaborated that the Bank’s improved third quarter performance had been achieved despite slow growth in lending, rising NPLs and impairment provisions and the continuing rise in interest expenses as a result of the shift from savings to time deposits. “In the context of these challenges, our nine month results can be described as creditable,” he said.
The Commercial Bank Group reported gross income of Rs 112.358 billion for the nine months, an improvement of 11.07%. Interest income grew by 11.49% to Rs 97.353 billion, but interest expenses increased at a higher rate of 13.95% to Rs 60.930 billion, resulting in net interest income growing by 7.62% to Rs 36.424 billion. Notably, interest income accounted for 86.65% of gross income, marginally higher than the figure of 86.31% for last year. Net interest income meanwhile accounted for 72.98% of total operating income, marginally less than last year’s figure of 73.05%.
Total operating income improved by 7.72% to Rs 49.906 billion, helped by an 18.47% growth in other income to Rs 5.804 billion mainly as a result of a reduction of Rs 1.042 billion in losses on forward exchange contracts in the nine months under review, and net fees and commission income of Rs 7.679 billion, which was up by 1.22%.
Total impairment charges rose by 21.21% to Rs 8.545 billion, but impairment provisions for the third quarter of 2019 declined by 18.06%, the Bank disclosed.
Net operating income grew by 5.3% to Rs 41.362 billion, improving on the figure of 2.99% for the first half of the year.
Total expenses increased by 9.04% to Rs 19.150 billion for the nine months reviewed.
Total assets of the Group grew by Rs 50 billion or 3.82% to Rs 1.370 Trillion as at 30th September 2019, and reflected a YoY growth of Rs 115.068 billion or 9.17%.
Gross loans & advances grew marginally to Rs 900.118 billion reversing the trend of negative growth witnessed in the first half, while deposits grew by Rs 52.768 billion or 5.31% since 31st December 2018 to Rs 1.047 Trillion as at 30th September 2019. The growth of deposits over the preceding 12 months was Rs 94.806 billion or 10% YoY, at a monthly average of Rs 7.9 billion.
At Bank level, Commercial Bank reported PBT of Rs 16.287 billion, down by 8.74% for the nine months, but recorded an increase of 4.73% to Rs 6.241 billion for the third quarter. Similarly, the Bank’s PAT for the nine months was down by 6.61% to Rs 11.223 billion, but up by a noteworthy 20.39% to Rs 4.757 billion for the three months ended 30th September 2019.
In other key indicators, the Bank’s Total Tier 1 capital ratio (with capital buffers) at 12.260% as at 30th September 2019 was comfortably above the minimum requirement of 10% which became effective from 1st January 2019 under Basel III while the Total Capital Ratio of 16.208% was also above the Basel III minimum requirement of 14%.
The Bank’s gross NPL ratio increased to 5.09% at the end of the third quarter from 4.86% as at 30th June 2019, while its net NPL ratio increased to 3.22% from 2.96% as at 30th June 2019.
The Bank’s return on assets (before tax) and return on equity improved to 1.64% and 12.12% respectively from 1.53% and 10.75% reported for the first half of 2019.
The only Sri Lankan Bank to be ranked among the world’s top 1000 banks for nine years consecutively, Commercial Bank operates a network of 267 branches and 854 ATMs in Sri Lanka. The Bank won over 40 international and local awards in 2018, has received more than 25 awards to date this year, and been ranked among the 10 Most Admired Companies in Sri Lanka in 2019.
Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Representative Office in Yangon and a Microfinance company in Nay PyiTaw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.