ComBank records Rs 2.2 b PAT in Q1

The Commercial Bank of Ceylon PLC has made a measured start to 2014 despite excess liquidity, lower demand for credit and thinning margins.

The Bank has reported an operating profit before VAT and NBT of Rs 3.897 billion for the three months ended March 31, 2014, growth of 4.73% over the first quarter of 2013.

Operating profit after VAT and NBT (PBT) grew by 1.88% to Rs 3.291 billion, with VAT and NBT for the three months totalling Rs 606.3 million, an increase of 23.53%.

The Bank's profit after tax for the quarter reviewed was up 1.68% to Rs 2.279 billion on gross income of Rs 17.760 billion.

Commercial Bank Chairman Dinesh Weerakkody said, "The Bank performed well this quarter, despite a challenging environment.

We continued to grow business volumes and strengthen key performance indicators.

As we move into the second quarter, we expect to grow in the areas where we have a long track record of strong earnings and will continue to execute on our strategic priorities."

Commercial Bank, Managing Director Ravi Dias said, "The Bank recorded healthy growth in net interest income despite narrowing margins through an increase in interest-earning assets and timely re-pricing of assets and liabilities."

The Bank had also achieved gains from trading and financial investments and contained the growth in expenses to under 10%, he said, adding that the Bank had also maintained the momentum of deposit growth, averaging more than Rs 5 billion a month.

The Bank's net interest income for the three months grew 17.07% to Rs 6.571 billion. Net gains from trading recorded an increase of Rs 377 million, while net gains from financial investments increased by Rs 123 million. Net fees and commission income was up 15.24% to Rs 1.047 billion.

However, 'other income' comprising recoveries and foreign exchange profit including translation gains, declined by 39.74% to Rs 679 million largely due to a drop in exchange profit and translation losses.

Total operating income comprising net interest income, net fees and commissions and other income amounting to Rs 8.895 billion, an improvement of 14.84% for the quarter.

Impairment charges on loans and losses increased from Rs 517 million in the first quarter of last year to Rs 1.151 billion, due to higher non-performing loans (NPLs), a common challenge faced by the banking industry.

The Bank's gross NPL ratio increased from 3.88% at the end of December 2013 to 4.40% at the end of the first quarter of 2014, while its net NPL ratio increased from 2.12% to 2.54%.

Total expenses for the period amounted to Rs 3.847 billion, an increase of 9.68%. The Bank said it expects a similar trend in expenses, as its plans moderate expansion of the branch network in 2014.

The Bank's total assets reached Rs. 648 billion at the end of first quarter 2014, a growth of Rs. 41 billion or 6.83%.

Loans and receivables totalled Rs 418 billion, while total deposits reached Rs 481 billion.

The Bank's capital adequacy ratios stood at 12.84% for Tier I and 16.34% for Tier I and Tier II, well above the minimum statutory needs of 5% and 10%. Taken as a Group, the Commercial Bank, its subsidiaries and associates posted pre-tax profits of Rs 3.324 billion for the three months, a growth of 2.13%. Group profit after tax was up 2% to Rs 2.302 billion.

Commercial Bank operates a network of 235 branches and 588 ATMs. Ranked the most valuable private sector brand in the country in 2014, the Bank has won multiple awards as Sri Lanka's best bank over several years and was adjudged one of the country's 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013.