DFCC posts Rs 3.5 b PAT

DFCC Bank in its Annual Report for 2012/13 released last week, presented good progress on all fronts. The consolidated profit after tax of the Group increased 16% to Rs 3,538 million.

The contribution from the combined banking business of DFCC Bank (DFCC) and its 99% owned subsidiary, DFCC Vardhana Bank (DVB) was up 19% to Rs 3,407 million.

Chief Executive Nihal Fonseka said, “I am happy that DFCC delivered better results in many areas compared to 2011/12 and even more importantly made progress on several key aspects of the strategic re-positioning which commenced in the previous year. Amidst a somewhat challenging operating environment, total income of the combined DFCC Banking Business (DBB) comprising interest income and other income recorded an increase of 47.8% to Rs 17,862 million in the year under review.”

“Gross loans and advances of DFCC Bank increased 10%, while DBB grew by 14.7%. DFCC Vardhana Bank increased its exposure to personal financial services assets while Construction, specially finance for contractors, and domestic trading sectors recorded relatively higher levels of credit growth. Customer deposits of DBB grew by 37.3% during the year,” he said.

DFCC’s overall Credit Quality of the portfolio has been maintained. The DFCC Banking Business’ impaired loans, advances and receivables as measured in accordance with the applicable IFRS based new accounting standards which came into effect, as a proportion of the total portfolio has reduced from 7.3% to 7.1% during the year. Expenses have also been managed effectively with DFCC Bank’s ratio of operating expenses to total operating income (before impairment charge) improving further from 30% to 28.7% during the year.

Chairman, J M S Brito said, “A key deliverable is return on investment. A shareholder of DFCC would have received Rs 57.50 in dividends for each share held over the ten-year period from 2003 to 2012, which works out to an average dividend of Rs 5.75 per share per annum. In overall terms, taking into account the bonus issues and the rights issue during this period, the Total Shareholder Return (TSR) works out to approximately 20% per annum.”

Consolidated Group Equity increased from Rs 32,927 million (including minority interest) to Rs 37,252 million.

Earnings per share increased to Rs 13.04 from Rs 11.19.

In this reporting year, DFCC made a transition to the new Sri Lanka Accounting Standards that are IFRS compliant. Veteran banker Nihal Fonseka will relinquish office at DFCC in September this year after serving 14 years as Chief Executive.