BoC records Rs12.3 b PAT

The Bank of Ceylon (BoC) has reported Rs. 16.6 billion Profit Before Tax (PBT) for the nine months ended September 30, 2015. On YoY basis PBT showed 11% growth. Profit After Tax (PAT) stood at Rs. 12.3 billion with a growth 10%.

The BoC Group which comprises with ten subsidiaries and five associate companies has reported Rs. 16.5 billion PBT with 8% growth while reporting Rs. 12.2 billion PAT with 8% increase over the corresponding period of the previous year. The Bank represents 97% of the Group's total assets and becomes the main contributor to the Group's performance too.

Net Interest Income (NII) which contributes a major portion to the total operating income amounted to Rs. 35.5 billion and shows a 42% increase. This significant growth of NII has been due to higher interest income complemented by 8% reduction in interest expense showing the Bank's ability to manage the deposit mix efficiently.

Following the improvement in NII, Net Interest Margin (NIM) improved from 2.7% to 3.4% YoY basis. Other operating income also increased by 80% YoY basis largely due to the increase in foreign exchange gains due to the rupee depreciating against the US Dollar. The increase of 19% in personnel expenses has been compensated by a 14% dip in other expenses causing an ultimate result of a mere 5% increase in total operating expenses.

The BoC emerged as the Strongest Bank by Balance Sheet in the 'Asian Banker 500' (AB 500) competition conducted by Asian Bankers in October 2015. AB 500 Strongest Banks by Balance Sheet Ranking is at comprehensive annual evaluation which captures the quality and sustainability of the Balance Sheet of banks in the region.

Maintaining its strength further, the Bank achieved a Rs.1.5 trillion asset base at end of 3Q, 2015 recording 12% growth compared to the previous year end. Gross loan portfolio has gone up by Rs.102 billion to Rs. 880 billion indicating a 13% increase from the end of the previous year.

Leases, term loans, overdrafts, loans under schemes and personal loans are the major contributors to loan growth while compensating the plunge in the pawning portfolio impacted by gold prices. Maintaining prudential measures accumulated impairment provision of Rs. 44.9 billion has been created in terms of impaired loans, amounting to 5% of gross loans.

The investment portfolio also showed an upward movement due to increased investment and treasury activities. As at end September 2015 deposits amounted to Rs. 998 billion which is close to the target of Rs.1 trillion deposit base and accounted for 71% of the Bank's total liabilities.

The Bank's deposit base increased by 7% from previous year end under favourable mix of CASA (current and savings account to total deposits) 46.1% with a improvement of 290 bps.

The Bank's Return on Average Assets (ROAA) ratio stood at 1.6% and Return on Average Equity (ROAE) ratio stood at 20.8%. Through effective cost management the Bank has achieved 42.4% cost to income ratio which is a significant improvement from 48.7% in the corresponding period of the pervious year. The Bank maintained better trade-off between liquidity and interest earning assets by maintaining domestic liquid asset ratio of 26.0% and off-shore liquid asset ratio of 31.3% as of end September 2015, standing well above the Central Bank's benchmark of 20%.

Capital Adequacy Ratio (CAR) which is a key regulatory ratio for banks has been maintained above the regulatory levels and Tier I capital ratio stood at 8.4% and Tier II at 11.8%. The Bank expects an increase in its Tier II capital ratio with the issuance of Rs. 8 billion debentures in October this year. During nine-month period of this year BoC pad Rs.10.4 billion to the Government through taxes and dividends.

Fitch Ratings Lanka and ICRA Lanka have reaffirmed the Bank's Long Term Issuer Default Rating (IDR) as 'BB-', National Long Term Rating as 'AA+ (lka)' stable outlook and '(SL) AAA' with stable outlook. Further, an international rating body, Moody's also has reaffirmed the Bank's rating as 'B1'.

The Bank is executing many process changes this year to position the Bank in the modern era by delivering the best to customers.