Commercial Bank’s 9-month pre-tax profit tops Rs. 12 b

• Deposits grow by Rs. 6.6 b a month to Rs. 588.9 b; loan book up 19% to Rs. 481.9 billion

The Commercial Bank of Ceylon PLC has reported profit before tax of Rs. 12.190 billion for the nine months ending 30 September 2015, achieving a creditable 8.72% growth despite narrowing margins and substantially lower capital gains in comparison with the same period of the preceding year.

The bank’s profit after tax of Rs. 8.426 billion at the end the third quarter reflected growth of 7.96%, while gross income at Rs 56.694 billion was an improvement of 4.58%, according to interim financial statements filed with the Colombo Stock Exchange by Sri Lanka’s largest private bank. Profit before VAT and NBT was up 8.51% to Rs. 14.235 billion.

Interest income for the nine months improved by 4.53% to Rs. 48.605 billion, while interest expenses grew by a lower rate of 1.08% to Rs. 26.207 billion, helped by the growth of low cost funds in the bank’s deposit mix in the review period. Consequently, net interest income grew by a higher rate of 8.88% to Rs. 22.398 billion.

Other income at Rs. 7.432 billion was on par with that of the corresponding nine months of the previous year, during which the bank posted substantial capital gains on bond trading.

The figure for 2015 was helped by an increase of Rs. 554.6 million in net gains from trading, an increase of Rs. 652.8 million in recoveries, exchange profit and investment income, and an improvement of Rs. 316.434 million in net commissions and fees, the bank said.

Commenting on the bank’s performance up to the third quarter, Commercial Bank Chairman Dharma Dheerasinghe said: “The figures are a good indication of how the bank has kept its momentum going throughout the review period in the face of changing conditions and reduced margins. We have also had robust deposit and loan growth in the review period and hope to end the year with a characteristically solid result.”

Commercial Bank Managing Director/CEO Jegan Durairatnam noted that the impact of factors such as the absence of bond trading income and less favourable interest rates in 2015 had been effectively mitigated by the bank’s strong attention to improving volumes in core business areas. “A focus on getting the fundamentals right has always been one of the strengths of Commercial Bank, and helps us navigate challenging conditions,” he said.

Loans and receivables to other customers grew by a healthy 18.87% over the nine months to Rs. 481.923 billion as at 30 September 2015, an increase of Rs. 76.491 billion since end 2014, and a growth of Rs. 94.474 billion or 24.38% YoY.

Deposits from customers totalled Rs. 588.917 billion at the end of the nine months reviewed, up Rs. 59.556 billion at an average of Rs. 6.6 billion per month since 31 December 2014. Year-on-year growth of the bank’s deposit base was Rs. 84.756 billion or 16.81%.

Total assets grew by 9.72% since end 2014 to Rs. 872.923 billion as at 30 September 2015, an increase of Rs. 77.314 billion over nine months, and a YoY improvement of Rs. 125.634 billion or 16.81%.

Loan growth and good management of non-performing loans enabled the bank to reduce its gross and net NPL ratios to 3.01% and 1.52% respectively, from 3.84% and 2.1% a year ago.

The bank’s interest margin declined from 3.91% at end September 2014 and 3.88% at end 2014 to 3.59% at the end of the review period.

At Group level, Commercial Bank, its subsidiaries and associates reported profit before tax of Rs. 12.225 billion for the nine months, an improvement of 8.28%, and profit after tax of Rs. 8.435 billion, an increase of 7.43%.

The only Sri Lankan bank to be ranked among the Top 1000 banks of the world for five consecutive years, Commercial Bank operates a network of 246 branches and 618 ATMs in Sri Lanka. The bank was ranked the most valuable private sector brand in Sri Lanka in 2014 and has also won multiple awards as Sri Lanka’s best bank from several 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.

Commercial Bank’s overseas operations encompass Bangladesh, where the bank operates 18 branches and Myanmar, where it has a Representative Office in Yangon. In September 2015, the Bank received regulatory approval for the establishment of a fully-fledged Tier I bank in the Maldives with a local partner.
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