Seylan Merchant Bank records significant increase in profits

Seylan Merchant Bank Limited (SMB) completed another successful financial year recording a significant increase in profits according to the annual report for the year 2005.

"As a result of the significant increase in total assets of both Bank and group, the net assets per share increased significantly recording a growth of 24.2% in a Group."

Gross income of the Bank showed a growth of Rs. 31.5 million or 5.6% during 2005 compared to 2004. The growth was contributed through the increase in interest income of Rs. 541.8 million in 2005 recording a growth of Rs. 35.2 million or 6.9%.

The gross income of the group grew significantly to Rs. 795.8 million in 2005 from Rs. 699.7 million in 2004 reflecting an increase of 13.7%.

The Leasing arm of SMB group, SMLL contributed mainly for the gross income growth. SMLL earned an interest income of Rs. 168.2 million in the year under review recording a 168% growth compared to the previous year.

The interest cover ratio of the Bank was 1.08 when compared to the interest cover ration of 1.6 at the end of December 2004. Through careful monitoring of exposure to the market interest rates and in process by mobilisation through cheaper sources of funds led to maintain low interest cover ratio of SMB group. The interest cover ratio of SMB group records 1.15 at the end of 2005 compared to 1.16 at the previous year-end.

The operating expenses of the Bank has reduced noticeably to Rs. 128 million in 2005 from Rs. 143 million in 2004 recording a reduction of 10% due to focus on controlling overhead costs. The group operating expenses have reduced marginally due to efficient distribution of operating expenses despite the extensive branch expansion during the year.

Profit before taxes, provisions and associated company share were increased considerably in the Bank recording a growth of 33.4%. The SMB group profit before taxes and provisions recorded a growth of only 16.3% during the year due to provisioning for non performing loans and leases.

The group had made a considerable provisioning for tsunami affected facilities during the year. As a result, profit before tax had grown by 38.2% of the Bank and 9.4% of the SMB Group.

Total assets of the Bank increased to Rs. 3.8 billion in 2005 compared to the previous year recording an increase of Rs. 199.7 million or 5.6%. Increases in loans, advances and investments have contributed significantly for the growth.