BoC records Rs. 15.7b PBT

The Bank of Ceylon (BoC) concluded its financial year 2013 reporting the highest profits over its domestic peers proving its market leadership.

The results indicate an increase in volumes in assets and gross operating income and achieving asset growth in all business lines. Firmly entrenched as Sri Lanka’s number one financial organisation through its 75 years of existence, the Bank is geared to support the growth and development of the country by being the largest contributor to the Government economic development aspiration of several hubs. The Bank of Ceylon has recorded a pre-tax profit of Rs. 15.7 billion for 2013 reflecting inherent strengths and affirming its position as the leading financial services provider in the country despite the many challenges faced by the banking industry during 2013.

The Chennai and Male branches recorded profits in 2013. The Bank passed yet another milestone by raising its second international US Dollar bond for US $ 500 million at competitive rates which was over-subscribed 6.8 times endorsing the acceptance the Bank has earned within the global investor community.

A further Rs. 8.0 billion was successfully raised locally through listed debentures in 2013.

The bank continues to lend for infrastructure projects with long gestation periods which are undertaken by the main shareholder, the Government. These include financing of the road development projects undertaken throughout the country where 368 km of road development was financed.

Similarly the Bank has accommodated financial assistance of Rs. 235.4 billion for the power and energy sector that will provide for the ever increasing energy needs of the country. The Bank has also committed Rs. 30.9 billion for projects to improve the quality of the drinking water and has financed 13 projects in the tourism sector amounting to Rs. 5.2 billion to increase room capacity by 1,384.

The Bank’s assets grew by 14% to Rs. 1.2 trillion making it the only Sri Lankan bank having a trillion balance sheet for two consecutive years. The growth of assets was mainly due to the increase of the loans and investments.

Gross loans and advances to customers represent the largest potion accounting for 63% of total assets. The Bank of Ceylon is the largest provider of capital to the private and public sectors accounting for 22% of the banking industry’s total loans and advances.

The Bank has expanded its gross loan portfolio by 6% from Rs. 715 billion in 2012 to Rs. 755 billion in 2013 with growth evenly distributed between the private sector and the public sector.

The Bank of Ceylon is the market leader in customer deposits. The total customer deposit base grew from Rs. 693.4 billion in 2012 to Rs. 842 billion in 2013, a growth rate of 21% which compares well with the industry growth rate of 15% reflecting the strong domestic franchise.

The Bank of Ceylon increased its Net Interest Income (NII) by 5% from Rs. 35.3 billion in 2012 to Rs. 37.1 billion in 2013. Growth in NII was limited mainly due to the declining Net Interest Margin from 3.7% in 2012 to 3.3% in 2013. Net fee and commission income account for 12% of the Bank’s total operating income and is generated from transactional banking volumes in the country.

Gains from trading securities were higher than in the previous year by Rs. 764 million, due to decline in the interest rate and exploitation of yield curve. The trading equity portfolio of the Bank declined in market value as a result of weaker capital market performance.

The Bank’s capital adequacy ratio of 12.1% is higher than the regulatory minimum requirement. The Bank’s domestic liquid asset ratio was 27.7% for the year while the offshore liquid asset ratio was 31.4%. Both ratios have exceeded regulator’s benchmark of 20%.

The sound risk management practices adopted by the Bank generated sustainable profits reducing the dependence on volatile income sources while cushioning the impact of its operating model in a year of relatively moderate demand for private sector credit.

The Bank of Ceylon has a proud heritage in customer centricity, often being the pioneer to set up a presence in rural areas.

The Bank has over 10 million customers which gives an approximate customer penetration rate of 54% which is one of the measures used to evaluate progress on social goals.

The merger of Ceylease Limited and MCSL Financial Services Limited was one of the key achievements of the Bank of Ceylon. Amalgamation of the two businesses will enable the entities to reap economies of scale which are vital for success in the financial services sector which have a high capital need, substantial investments in technology, financial and regulatory reporting and a number of other thresholds which are difficult when the companies are small.

Further merger opportunities within the Group are being explored to rationalise the group structure.