ComBank ends 2015 with Rs 11b net profit

Commercial Bank of Ceylon PLC has recorded profit before tax of Rs 17.144 billion for the 12 months ended December 31, 2015, a year in which it strengthened its positions in Sri Lanka and Bangladesh and accelerated its transition to becoming Sri Lanka's first private international bank.

A carefully managed performance saw bank attain solid growth across all business lines to improve pre-tax profit by a healthy 8.94% over the preceding year and achieve a net profit of Rs 11.903 billion for 2015, a growth of 6.47% despite lower margins, reduced capital gains and higher tax commitments. Profit before Financial VAT and Nation Building Tax (NBT) was up 8.73% to Rs 20.033 billion.

Gross income increased by 7.03% to Rs 77.868 billion, and net interest income grew by a robust 11.47% to Rs 30.346 billion, the Bank reported in a filing with the Colombo Stock Exchange (CSE).

One of the many performance highlights of the year under review was the strong growth of the Bank's loan book, which increased by Rs 102.684 billion or 25.33% to Rs 508.115 billion. This was the first time that the Bank's loan book achieved a net growth of more than Rs 100 billion in a year.

Total assets grew by Rs 84.195 billion or 10.58% over the 12 months to Rs 879.805 billion at December 31, 2015. Deposits from customers increased by Rs 94.740 billion at an average of Rs 7.9 billion a month to Rs 624.102 billion at the end of 2015, reflecting Year-on-Year growth of 17.90%.

Chairman, Commercial Bank, Dharma Dheerasinghe said, "We are pleased with these results because they reflect the ability of the Bank to grow in changing conditions, while continuing to enlarge its footprint in Sri Lanka and overseas, and consolidating its position as a catalyst in the socioeconomic progress of our country."

The Bank's Managing Director/CEO Jegan Durairatnam said 2015 was noteworthy because a strong foundation for future growth had been set with the licences secured to operate in Myanmar, the Maldives and Italy.

Interest income had increased by 6.79% to Rs 66.031 billion, while interest expenses had grown by 3.11% to Rs 35.685 billion, helped by an improved Current Account and Savings Account (CASA) ratio and due to timely re-pricing of assets and liabilities.

Other operating income improved by 7.65% to Rs 10.936 billion, with net fees and commissions growing by 11.24% to Rs 5.374 billion, other income including recoveries of loans written off increasing by 20.67% to Rs 4.055 billion, and the conversion of a net loss on trading of Rs 305 million in 2014 to a net gain of Rs 813 million in 2015.

However, net gains from financial investments in the year reviewed totalled only Rs 694 million as against a profit of Rs 2.273 billion in 2014 which came mostly from profit from bond trading.

Although the Bank witnessed in increase in impairment charges by 22.11% to Rs 3.943 billion, the Bank's non-performing loans reduced in the year under review.

Total operating income before impairment charges grew by 10.44% to Rs 41.282 billion, and net operating income improved by 9.33% to Rs 37.338 billion, the Bank reported. Total operating expenses for the 12 months was up 10.04% to Rs 17.306 billion.

The Bank's gross and net non-performing loans (NPL) ratio improved to 2.74% and 1.41% respectively from 3.47% and 1.86% at the end of 2014, while return on assets (ROA) and return on equity (ROE) reduced to 1.42% and 16.90% due to lower margins and high asset growth. The cost income ratio stood at 48.92%, which is below the industry average, while the Bank's net interest margin reduced to 3.39% from 3.60% in 2014.

The Bank improved its provision cover to 48.49% in 2015 from 46.34% at end 2014. Capital adequacy ratios declined marginally due to the growth of its loan book, but at 11.60% for Tier I and 14.26% for total (Tier I + Tier II) capital adequacy, remained well above the minimum statutory requirements of 5% and 10%.

At Group level, Commercial Bank, its subsidiaries and associates reported profit before tax of Rs 17.136 billion for the year ended December 31, 2015, an improvement of 8.05%. Profit after tax for the year grew by 5.48% to Rs 11.859 billion.