DFCC Bank records significant growth in pre-tax profits

DFCC Bank recorded significant growth in Profit before Tax at Bank and Group level with 13% and 17.5%, during the year ended March 31, 2007. However, this growth is not translated to Profit after Tax where marginal declines were recorded due to considerably higher taxation, both on account of the financial services Value Added Tax (VAT) and the increased rate of Income Tax during the financial year 2006/07.

The subsidiary company, DFCC Vardhana Bank Limited, recorded good growth and contributed significantly to Group profits as did the associate company, Commercial Bank of Ceylon Limited, although the contribution to the Profit after Tax from the latter was somewhat lower than the previous year due to a pension plan restructuring expense.

The recent policy changes affecting ownership limits applicable to banks will require DFCC Bank to consider various options on the best way to provide the full range of banking and financial services in the longer term while preserving the value of the substantial investments in DFCC Vardhana Bank Limited and Commercial Bank of Ceylon Limited. The Board of Directors will formulate and execute appropriate strategies to accomplish these objectives.

In June 2006, a Bonus Issue of one for every two shares was made and an interim dividend of 45% was paid to shareholders in March 2007 on the enhanced capital. The Board also resolved to make a Rights Issue of one ordinary share for every four ordinary shares held at a price of Rs. 140 per share and thereafter, to effect a Bonus Issue of one ordinary share for every five ordinary shares.

The Board has also recommended a final dividend of 5% to be paid to shareholders on the enhanced capital.