COMBank posts strong results for 2006

The Commercial Bank Group, comprising Sri Lanka's leading private sector bank and its subsidiaries and associates has posted a robust financial performance for the year ended December 31, 2006, with strong growth in business volumes and healthy improvements in key financial indicators, despite a turbulent external environment and several exceptional items.

In un-audited results released to the Colombo Stock Exchange (CSE) the Group reported a pre tax profit of Rs. 4,311.7 million for 2006, an increase of Rs. 643.8 million or 17.55 per cent over 2005.

This profit includes a gain of Rs. 749.8 million realised on the disposal of DFCC shares and a provision of Rs. 1,746.2 million on account of the contribution made for the restructured pension scheme, two exceptional items during the year.

This growth in pre tax profit was achieved despite the increase recorded in the Special VAT liability to Rs. 971.0 million from Rs. 624.6 million, an increase of Rs. 346.3 million or 55.46 per cent, which in turn was due to the increase in Special VAT rate from 15 per cent in 2005 to 20 per cent in 2006, the Bank said.

The post tax profit of the Group amounted to Rs. 2,060.3 million as against Rs. 2,358.0 million reported in 2005, recording a drop of Rs. 297.7 million or 12.63 per cent. A sharp increase in the Group's income tax liability to Rs. 2,251.4 million for 2006 from Rs. 1,309.9 million for 2005, an increase of Rs. 941.5 million or 71.88 per cent, resulted in the Group recording a drop in post tax profits.

"This unusual increase in corporate tax liability was primarily due to the increase in corporate tax rate from 30 to 35 per cent in 2006 and Rs. 1,669.7 million out of the provision for the restructured pension scheme being disallowed for tax purposes," Commercial Bank's Senior Deputy General Manager (Finance and Planning) Ranjith Samaranayake said.

However, after discounting these two items, the Group recorded a normalised pre tax profit of Rs. 5,188.0 million, an impressive growth of Rs. 1,520 million or 41.44 per cent over the previous year. Similarly, the normalised post tax profit of the Group amounted to Rs. 2,897.3 million, reflecting a growth of Rs. 539.2 million or 22.87 per cent over the previous year, a noteworthy achievement, he said.

This impressive growth in normalised profit was facilitated mainly by the strong growths recorded in business volumes of the Bank. Total deposits crossed the milestone of Rs. 150 billion mark to reach Rs. 157.6 billion as at December 31, 2006 as against Rs. 127.6 billion reported at end 2005, reflecting a growth of Rs 30 billion or 23.54 per cent.

Gross advances also crossed the Rs. 150 billion mark and reached Rs. 156.6 billion as at December 31, 2006 from Rs 124.7 billion reported an year earlier, representing a growth of Rs. 31.90 billion or 25.60 per cent.