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| Sunday, 16 March 2003 |
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Commercial Bank records all-round growth by INDUNIL THENUWARA The Commercial Bank of Ceylon expects its growth in profits to be minimal during 2003 due to the effects of the Value Added Tax (VAT). "We expect to pay about Rs. 200 million as VAT during the year. We have to pay 10 per cent of our profits and 10 per cent on remuneration as tax. So, the more you earn, the more tax you have to pay; the more you pay as salaries, the more tax you have to pay," Commercial Bank Chairman Mahendra Amarasuriya told a recent news conference. The news conference was held to announce the bank's annual results for 2003. The bank reported healthy growth in all areas of business despite 2002 being a tough year for the banking industry, Amarasuriya said. Turnover grew by Rs. 442 million to Rs. 8.1 billion in 2002, yielding a pre-tax profit of Rs. 1.525 billion, up 15.1 per cent. Profit after tax grew 19.2 per cent to Rs. 1.204 billion. Total assets at the end of the year stood at Rs. 73.3 billion, having grown 24 per cent or Rs. 14 billion over the year. The pre-tax profit of the Group was up 19.8 per cent to Rs. 1.704 billion and post-tax profits growing 25.4 per cent to Rs. 1.312 billion. He added that the Government policy of reducing interest rates had narrowed interest margins, directly impacting net interest income, the bank's main income source. Lower credit demand in the first three quarters of the year had saddled banks with excess liquidity. A relatively stable exchange rate had an impact on translation gains, the second largest source of revenue, while international developments kept interest margins on foreign currency deposits down. Managing Director Amitha Gooneratne said Commercial Bank had over a million customers at the end of the year with about 12,000 new customers joining the network every month. Fee-based income, another important contributor to revenue, grew 29.6 per cent to Rs. 824 million. "We are in the process of structuring a debenture issue of upto three billion rupees and a preference share issue of upto one million rupees to strengthen capital adequacy and expand medium-term lending," he said. Gooneratne added that Commercial Bank will not be moving out into the SAARC region within this year. "Regional expansion was on the cards and we were looking at Chennai, Maldives and Bangladesh. We are considering if they are worthwhile markets before venturing out," he said. |
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