Combank posts Rs 4.4 b PAT in six months

The Commercial Bank of Ceylon PLC has reported a gross income of Rs 34.720 billion and interest income of Rs 30.168 billion at the end of its second quarter, achieving growth of 12.10% and 22.58% through strong operational growth in the six months ended June 30, 2013.

Commercial Bank, Chairman, Dinesh Weerakkody and Managing Director and CEO Ravi Dias.

The Bank reported pre-tax profit of Rs 6.508 billion and post-tax profit of Rs 4.472 billion for the six months, as against Rs 7.507 billion and Rs 5.173 billion for the corresponding period of the past year, during which period translation gains on foreign exchange earnings were a major contributor to profits.

In contrast, during the first half of 2013, foreign exchange income was adversely affected by mark-to-market losses on swaps relating to overseas funding raised by the Bank in the recent past.

Net interest income for the period improved by 6.24% to Rs 11.932 billion. However, interest expenses grew by 36.30% to Rs 18.236 billion, narrowing margins, a statement from the Bank said. The rise in interest expenses in the review period was largely due to a 8.64% growth in total deposits which increased by Rs 34.162 billion over the six months to Rs 429.537 billion as at June 30, 2013, an average growth of Rs 5.7 billion per month.

Other income improved by 9.32% to Rs 3.060 billion for the six months, while net fees and commission income grew by 13.22% to Rs 1.920 billion.

Despite the lower demand for credit, total loans and advances of the Bank grew by 4.44% from Rs 373.544 billion at December 31, 2012 to Rs 390.119 billion at the end of the half year.

"Signs of improving credit growth were witnessed during the latter part of the second quarter and is expected to continue," a bank spokesman said.

Total assets of the Bank increased by 9.06% from Rs 511.7 billion at December 31, 2012 to Rs 558.1 billion at June 30, 2013.

Commercial Bank, Chairman, Dinesh Weerakkody said, "Operationally, we have much to be pleased about. We have maintained the momentum of deposit mobilisation and credit growth while improving capital adequacy and other ratios at a time when the banking industry in general experienced narrowing margins."

The Bank's Tier I Capital Adequacy Ratio improved to 13.85% as at June 30, 2013 from 12.64% at December 31, 2012, while Total Capital Adequacy (Tier I and Tier II) increased to 17.76% from 13.85%, largely due to $ 75 million raised by the Bank from the International Finance Corporation (IFC) as a ten-year Subordinated Term Debt that qualifies for Tier II Capital.

The gross and net non-performing loans ratios stood at 4.04% and 2.36% as at the end of the first half of the year compared to 3.37% and 1.84% at the end of 2012 due to the relatively low collections experienced by the industry.

Total expenses including personnel costs, depreciation, amortisation and other expenses for the six months was Rs 6.990 billion, a marginal increase of 5.74%.

"The focus on process improvement initiatives and cost containment helped the Bank to manage expenses amidst escalating costs," said Commercial Bank Managing Director and CEO, Ravi Dias.

Taken as a Group, the Commercial Bank, its subsidiaries and associates posted a pre-tax profit of Rs 6.548 billion for the six months reviewed. Profit after tax for the six months was Rs 4.490 billion.