DFCC Bank group profit after tax up 10% to Rs. 1,347 million

The non-audited group profit after tax, attributable to equity holders of DFCC Bank, for the nine months ended December 31, 2006 (current period) was Rs. 1,347 million, an increase of 10 per cent over the Rs. 1,225 million in the corresponding period (April to December 2005).

The financial year of the associate company, Commercial Bank of Ceylon Limited (CBC) and two subsidiaries, DFCC Stockbrokers (Pvt) Limited and DFCC Vardhana Bank Limited (DVB) ends on December 31.

Thus the nine months results for the period April 1, 2006 to December 31, 2006 includes the results of these companies for the period January 1, 2006 to September 30, 2006. The results of DFCC, DVB and CBC for the quarter to December 31, 2006 include the mandatory general provision of 0.1 per cent of the performing and overdue loans and advances balance on December 31, 2006 imposed by the Central Bank.

The profit before Value Added Tax and Income Tax expense was Rs. 1,652 million in the current period, an increase of 19 per cent over Rs. 1,386 million in the corresponding period after charging the recently mandated general provision which amounted to Rs 41 million for the quarter ended December 31, 2006.

The Bank continued to maintain and improve the momentum of growth during the quarter December 31, 2006. Loans and advances net of provisions on December 31, 2006 was Rs. 42,506 million, compared to Rs. 33,110 million on December 31, 2005, a year on year increase of 28 per cent.

This quarter recorded a growth of Rs. 3,130 million while growth in the first six months of this financial year ended September 30, 2006 was Rs. 3,062 million. Both term loans and financial leases contributed to this growth.

Market interest rates recorded a rising trend and had an impact on the cost of funds; however, the Bank was able to maintain the interest margin in the current period at the same level as in the corresponding period by re-pricing its variable rate assets.

The non-performing loans and advances as a percentage of the total loans and advances were 6.1 per cent at December 31, 2006, a reduction from 7.4 per cent on September 30, 2006. This improvement was due to the containment of advances that were newly classified as non-performing during the third quarter, recovery of previously provided advances and the growth in the credit portfolio.

The cumulative provision on non-performing loans as at December 31, 2006 was 24.5 per cent of gross non-performing loans and advances.

If non-performing loans fully provided and written off for accounting purposes are reinstated for purposes of computing this ratio, 52 per cent of the non-performing loans are covered by full or partial provision. At this stage the Bank has not made any changes to the general provisioning policy based on sector risk assessment but is in the process of reviewing the policy in the light of the recently imposed mandatory requirements.