DFCC Bank group profit after tax grows 26% to Rs. 1.7b

While the DFCC Bank profit after tax grew by 6%, the DFCC Group profit after tax grew a satisfactory 26% and return on equity improved to 15.8%, said DFCC Bank chairman Rajan Brito in the Annual Report for the financial year ended March 31, 2006.

The contribution from the Group's commercial banking operations was a significant factor in this performance. In particular, the significant improvement in the performance of the strategic 95% owned commercial banking subsidiary, DFCC Vardhana Bank Limited, resulted in the aggregate profit after tax of Rs 1,188 million for the two businesses, an increase of 16%.

In this year - the Golden Jubilee of DFCC Bank, the Board would recommend the payment of a first and final dividend of 60%, the highest to be paid in the five decades of DFCC's existence.

The Board will also seek approval for a capitalisation of reserves for the issuing of one bonus share for every two held, thereby materialising further value for shareholders.

Chief Executive Director Nihal Fonseka said profit before tax and VAT on financial services of the Bank's operations at Rs 1,855 million was 10% higher than in the previous year.

The increase would have been almost 17% had the final dividend of Rs 107 million from Commercial Bank of Ceylon Limited been approved before the closing of DFCC Bank's financial year, as has been the case in the past.

The net group profit attributable to shareholders recorded a 26% increase to Rs 1,704 million with diluted earnings per share increasing in tandem to Rs 29.42.

Strong demand for capital asset funding from construction, food and beverage, transportation and communication sectors helped loan and lease approvals as well as disbursements to grow significantly compared with the previous year. DVB contributed to the growth of customer advances at a Group level by significantly scaling up its operations, he said.