Bank of Ceylon (BOC) has concluded its financial year 2013 reporting the highest profits over its domestic peers successfully proving, yet again, its market leadership.
The results indicate an increase in volumes in both assets and gross operating income and achieving asset growth in all its business lines. Firmly entrenched as Sri Lanka’s No. 1 financial organisation through its 75 years of existence, the bank is fully geared to support the growth and development of the country by being the largest contributor to the Government economic development aspiration of 5+1 hubs.
The Bank of Ceylon has recorded a pre-tax profit of Rs. 15.7 billion for 2013 reflecting its inherent strengths and affirming its position as the leading financial services provider in the country despite the many challenges faced by the banking industry during, 2013. Both BOC Chennai and Malé branches recorded profits in 2013. This confirms Bank of Ceylon’s position as a truly international Sri Lankan bank.
The bank passed yet another milestone by raising its second international dollar bond for $ 500 million at competitive rates which was 6.8 times oversubscribed, endorsing the acceptance the bank has earned within the global investor community. A further Rs. 8 billion was successfully raised locally through listed debentures in 2013.
The bank continues to lend for necessary infrastructure projects with long gestation periods which are undertaken by its main shareholder, the Government of Sri Lanka.
These include financing of the road development projects undertaken throughout the country in which the bank is the dominant lender where 368 km of road development was financed. Similarly the bank has accommodated financial assistance of Rs. 235.4 billion for the power and energy sector that will provide for the ever increasing energy needs of the country.
The bank has also committed Rs. 30.9 billion for clean water generation projects in its effort to uplift the quality of the drinking water and has financed 13 projects in the tourism sector amounting to Rs. 5.2 billion to increase by 1,384 rooms, the room capacity in the tourism industry.
The bank’s assets grew by 14% to Rs. 1.2 trillion, making it the only Sri Lankan bank having a trillion balance sheet for two consecutive years. The growth of the assets was mainly due to the increase of the loans and investments.
Gross loans and advances to customers represent the largest potion accounting for 63% of total assets. Bank of Ceylon is the largest provider of capital to both the private and public sector accounting for 22% of the banking industry’s total loans and advances. The bank has expanded its gross loan portfolio by 6% from Rs. 715 billion in 2012 to Rs. 755 billion in 2013 with growth evenly distributed between the private sector and the public sector.
Bank of Ceylon is the market leader in customer deposits. The total customer deposit base grew from Rs. 693.4 billion in 2012 to Rs. 842 billion in 2013, a growth rate of 21% which compares well with the industry growth rate of 15% reflecting the strong domestic franchise.
Bank of Ceylon increased Net interest income (NII) by 5% from Rs. 35.3 billion in 2012 to Rs. 37.1 billion in 2013. Growth in NII was limited mainly due to the declining Net Interest Margin from 3.7% in 2012 to 3.3% in 2013. Net fee and commission income account for 12% of the bank’s total operating income and is generated from transactional banking volumes in the country.
Gains from trading securities were higher than in the previous year by Rs. 764 million, due to decline in interest rate and exploitation of yield curve. The trading equity portfolio of the bank declined in market value as a result of weaker capital market performance.
The bank’s capital adequacy ratio of 12.1% is higher than the regulatory minimum requirement. The bank’s domestic liquid asset ratio was 27.7% for the year while the offshore liquid asset ratio was 31.4%. Both ratios have exceeded regulator’s required benchmark of 20%.
The sound risk management practices adopted by the bank were able to generate sustainable profits reducing the dependence on volatile income sources whilst cushioning the impact of its operating model in a year of relatively moderate demand for private sector credit.
Bank of Ceylon has a proud heritage in customer centricity, often being the pioneer to establish a presence in rural areas. The bank has over 10 million customers which gives an approximate customer penetration rate of 54% which is one of the measures used to evaluate our progress on social goals.
Merger of Ceylease Ltd. and MCSL Financial Services Ltd. during 2013 was one of the key achievements of Bank of Ceylon. Amalgamation of the two businesses will enable the entities to reap economies of scale which are vital for success in the financial services sector which have a high capital requirement, need for substantial investments in technology, financial and regulatory reporting and a number of other thresholds which are difficult when the companies are small. Further merger opportunities within the Group are being explored to rationalize the group structure particularly in view of the Central Bank’s proposed consolidation Road Map.
The Bank of Ceylon earned global recognition as one of the top 1000 banks in the world, as listed by The Banker Magazine (UK) respectively in 2012 and 2013. The bank claimed its award as the only Sri Lankan brand recognised as one of Asia’s Best Brands in 2013 by the Chief Marketing Officer’s Council (CMO Council) based in Mumbai, India.
The Bank of Ceylon recorded yet another hat-trick in 2013 at the National Business Excellence awards ceremony organised by the National Chamber of Commerce. Focusing on the bank’s achievement, Fitch Rating Lanka ranked the Bank of Ceylon at AA+(lka), which is the highest rating awarded to a local commercial bank. Bank of Ceylon is also the only Sri Lankan bank with an international presence, with branches in Chennai, Malé, Seychelles and a subsidiary in London.
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