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Sunday, 10 June 2012

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DFCC Group post tax profits up 37% in 2011/12

The DFCC Group posted a consolidated profit after tax of Rs. 2,973 million for the financial year 2011/12, an increase of 37% over the Rs. 2,170 million recorded in the previous year (excluding the exceptional profit relating to the reduction of DFCC's shareholding in Commercial Bank of Ceylon PLC in 2010/11). For the quarter ended March 31, 2012, the post tax group profit increased by 22% to Rs. 769 million.

The main contributing factors to the profit growth were lower loan loss provisioning and higher write-backs due to improved asset quality and recoveries, higher non-funds based income and a strong loan portfolio growth. These more than offset the

slightly reduced contribution from the 50% owned investment banking joint venture Acuity Group, which was affected by the somewhat unfavourable market conditions in the latter part of 2011.

The combined credit portfolio of the DFCC Bank (DFCC) and DFCC Vardhana Bank (DVB) grew 47% from Rs. 60,771 million to Rs. 89,111 million.

Credit growth was experienced across diverse areas of economic activity, in the Corporate and Small and Medium Enterprise (SME) sectors.

DFCC and DVB continued to expand its operations by bringing its total number of branches and service locations to 127, of which 72% are outside the Western Province. Of particular significance is the growth of business in the Northern and the Eastern Provinces. DFCC operates 11 customer service centres in these provinces.

The Bank is also a net transferor of financial resources to these regions through direct lending which exceeds the deposits raised from the regions. It also acted as the apex lender of a EUR 5 million medium-term credit line provided by the German development finance agency KFW, for small-scale enterprises in the North and the East.

The total SME portfolio of DFCC and DVB comprising loans and leases increased from Rs. 34,991 million to Rs. 54,651 million during the year, recording a strong growth of 56% that follows a 29% growth in the previous year.

The SME portfolio now accounts for about 61% of the Banks' total credit portfolio signifying the importance attached to this sector to develop regional economies through capital formation and employment creation.

 

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