Commercial Bank picks up pace with 15% increase in 1H post-tax profit

Pre-tax profit increases to Rs. 7.443 billion,
Deposits reach Rs 569 billion, loan book grows to Rs 512 billion; total assets stand at Rs 814billion

Strong second quarter growth in fund based operations has enhanced the half year performance of Commercial Bank of Ceylon PLC, enabling Sri Lanka’s largest private sector bank to post profit before tax of Rs 7.443billion for the six months ending 30th June 2015, an increase of 14.97% over the corresponding six months of the previous year.

Profit after tax grew by a noteworthy 15.38% to Rs 5.168 billion on gross income of Rs 37.017 billion, the Bank said in a filing with the Colombo Stock Exchange (CSE).

Figures for the second quarter (April – June 2015) reflect robust year-on-year (YoY) growth, with profit before tax for the three months up 21.37% to Rs 3.864 billion, and profit after tax growing 20.85% to Rs 2.659 billion, the Bank said.

Total interest income for the six months ended 30th June 2015 improved by 2.59% to Rs 31.788 billion, and with interest expenses reducing by 1.62% to Rs 17.021 billion in the review period, the Bank increased its net interest income to Rs 14.768 billion, a growth of 7.91%. Net interest income in the second quarter amounted to Rs 7.535 billion, an improvement of 5.92% over 2Q 2014.

The Bank’s loan book net of provisions grew by Rs 14.499 billion over the six months to Rs 512.116billion, and by Rs 73.906 billion or 16.87% over the preceding 12 months.

Deposits from customers increased by an even more impressive Rs 39.721 billion or 7.5% since December 2014 to Rs 569.082 billion, averaging Rs 6.6 billion per month during the period reviewed. Deposit growth over the preceding 12 months was Rs 81.483 billion or 16.71%.

Total assets grew by Rs 18.231 billion over the six months reviewed to Rs 813.841 billion as at 30th June 2015. Asset growth over the preceding 12 month period was Rs 130.261 billion or 19.06%.

“Commercial Bank continues to be one of the strongest mobilisers of savings in Sri Lanka and one of the country’s biggest lenders,” the Bank’s Chairman Mr Dharma Dheerasinghe commented. “The volumes achieved in the first half of 2015, supported by solid fee-based operations are responsible for the significantly improved performance reflected by these figures.”

Commercial Bank’s Managing Director/CEO Mr Jegan Durairatnam added:“Given the progressively reducing interest margins witnessed over several quarters and the appreciation of the Rupee in the review period, the Bank’s performance becomes particularly noteworthy and is a reflection of the resilience that comes from strong management and a large base.”

Commercial Bank’s other income comprising exchange profit, commission income, recoveries and investment income improved by 5.11% to Rs 4.798 billion in the six months under review, while total impairment charges decreasedby12.83% to Rs 2.648 billion.

Net operating income at Rs 16.918 billion for the six months reflected a growth of 11.21% while total expenses increased by 7.25% to Rs 8.179 billion, the Bank reported.

In other key performance indicators, Commercial Bank improved its gross and net non-performing loans (NPL) ratios to 3.15% and 1.70% respectively from 3.47% and 1.86% as at 31st December 2014, despite interest margins narrowing to 3.70% during the six months reviewed from 3.88% as at December 2014.

The Bank’s Tier I and total capital adequacy ratiosas at end June 2015 stood at 12.70% and 15.45% respectively despite the growth in Risk Weighted Assets during the review period. These ratios are well above minimum statutory requirements.

The Bank had a strong liquidity position during the review period, and as at 30th June 2015 its Domestic Banking Unit hada liquid assets ratio of 27.75% while its Offshore Banking Unit’s liquid assets ratio stood at 50.37%. The minimum statutory liquid assets ratio prescribed by the Central Bank for banks is 20%.

At Group level, Commercial Bank, its subsidiaries and associates reported a profit before tax of Rs 7.493 billion for the six months, an improvement of 14.54%, and profit after tax of Rs 5.184 billion, an increase of 14.69%.

One of the highlights of the period reviewed was the opening of a Representative Office of the Commercial Bank in Yangon, the capital of Myanmar. The Bank also launched the first ever Green Banking Channel (GBC) counter at one of its branches as a part of the Bank’s sustainability initiatives.

Commercial Bank operates a network of 243 branches and 615 ATMs in Sri Lanka and is the country’s largest private bank. The only Sri Lankan bank to be ranked among the Top 1000 banks of the world for five consecutive years and ranked the most valuable private sector brand in the country in 2014, the Bank was adjudged the Best Bank in Sri Lanka by FinanceAsia and Euromoney in 2015. Commercial Bank has also won multiple awards as Sri Lanka’s best bank from other international publications over several years. The Bank was adjudged one of Sri Lanka’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013 and 2014, and has been rated the Most Respected Bank in Sri Lanka by LMD for the past 10 years. The Bank has also been the second Most Respected Corporate entity in the country overall for the past four years in the LMD rankings, and has been rated No. 1 in Sri Lanka for Honesty in 2013 and 2014 by the magazine.