Corporate

Commercial Bank forges ahead with solid start to 2010

A strong focus on fundamentals has enabled the Commercial Bank Group to post strong profit growth in the first quarter of 2010 while curtailing growth of its non-performing loans portfolio. In results released to the Colombo Stock Exchange, the Group comprising Commercial Bank PLC, its subsidiaries and associates reported pre-tax profit of Rs. 1,904.9 million for the three months ending 31st March 2010, an increase of 16.47 per cent over the corresponding quarter of last year.

The Group's after tax profit, at Rs 1,107.9 million reflected a growth of 24.18 per cent.

Elaborating on the key aspects of this performance, Commercial Bank's Chief Financial Officer Nandika Buddhipala said steps taken to control the growth of non-performing loans, combined with a decline in interest expenses at a higher rate than the decline in interest income had resulted in an improvement of interest margins in the period reviewed.

Although interest income for the quarter had declined 8.71 per cent to Rs. 8,366.9 million, interest expenses declined by a higher percentage of 22.99 per cent to Rs. 4,793.1 million thereby enabling the Group to grow nett interest income by 21.49 per cent to Rs. 3,573.8 million, he said.

Another significant contributor to growth was the Group's reduction in Specific Provisions and a significant improvement in recoveries during the quarter under review.

There was a near 60 per cent improvement of recoveries during the quarter compared to the corresponding quarter of last year, a reduction of Specific Provisions from Rs. 460.4 million to Rs. 163.6 million and a reversal of Rs. 72.6 million in General Provisions.

These gains were partly offset by a 26.09 per cent decline in non-interest income, largely due to exchange income reducing from Rs 983.6 million in the first quarter of last year to Rs 446.3 million in the quarter under review.

Other income improved 13.16 per cent to Rs 809.4 million.Total deposits of the Group rose from Rs 234.7 billion as at 31st December 2009 to Rs 241.3 billion at 31st March 2010, an increase of Rs 6.6 billion over three months.

Total gross loans and advances grew by Rs 716.1 million in the same period, from Rs 182.7 billion to Rs 183.4 billion.

The Group's assets, which stood at Rs 322.5 billion at the end of fiscal year 2009 increased by 3.73 per cent to Rs 334.5 billion at 31st March 2010.

Nett assets per share reached Rs 119.28 at the end of the quarter, from Rs. 114.91, while Basic Earnings per Share for the quarter ended 31st March 2010 was Rs 4.43, an improvement of 24.09 per cent.

Taken separately, the Commercial Bank, the largest entity in the Group, has reported a profit before tax of Rs. 1,891.8 million for the three months reviewed, reflecting a growth of 18.21 per cent.

The Bank's profit after tax stood at Rs 1,101.4 million, an increase of 27.15 per cent over the corresponding quarter.

Kotmale Holdings plc posts Pre-Tax Profit of Rs. 85.5 m

Kotmale Holdings PLC, has ended 2009-10 with profit before tax of Rs 85.5 million, largely derived from growth in its liquid milk-based product segment.

This figure, which represents an increase of 13.3 per cent over the previous year, is particularly noteworthy as it was achieved in the face of a strategic, albeit transitory, withdrawal from the powdered milk business due to unfavourable market conditions, the company said. This resulted in consolidated turnover remaining flat at Rs. 1,349.7 million.

Kotmale Holdings Director and CEO Jude Fernando said, 'We are encouraged with the growth achieved in what was a challenging year for most businesses'.

He said the liquid milk based products segment recorded an impressive performance improving turnover by 28 per cent and achieved a net profit growth of 119 per cent.

He said the Group planned to invest substantially to develop the liquid milk products segment and to augment its retail presence across the island in the year ahead.

A strong focus on cash management had also helped to reduce finance cost by as much as 65 per cent in the year under review, generating a positive impact on the company's bottom line.

Kotmale Holdings paid an interim dividend of Rs. 2 per share in November 2009, and has proposed a final dividend of Rs. 2 per share in respect of the year under review.

Commenting on the setback faced in the powdered milk business which once represented a third of the company's turnover, Fernando said rising world market prices for powdered milk at a time when domestic retail prices were capped and increased import duties had compelled the company to curtail import and sales until conditions were more favourable.

Seylan Bank gains Rs. 185.9 m profit in Q1 2010

Seylan Bank has posted an encouraging Rs. 185.9 m profit in the first quarter of 2010 recording a sharp 323% increase compared with the Rs.43.9 m in the corresponding period the previous year. The Bank's pre-tax profit was a staggering Rs. 291.7 m, up by nearly 419% from the Rs. 56.2 m in the corresponding period the previous year.

Among the major contributory features was the Bank's ability to retain its deposit base during Q1 2010 with savings deposits recording a 5.8% increase.

An elated Chairman of the Seylan Bank, Eastman Narangoda said that this achievement was once again an overwhelming endorsement of the faith and confidence the people of Sri Lanka have in the Seylan Bank. The Bank today enjoys both stability and profitability. Ever since the Central Bank-appointed new Board of Directors took over, we have been on an upward growth. Our wide-reaching Strategic Plan and aggressive recovery drive encompassing many areas have, in turn, successfully restored investor confidence.

The dividends are being enjoyed by our thousands of shareholders today. My Board of Directors and I, are very confident that 2010 will be a record making year for the Seylan Bank and that we will surpass all expectations in terms of overall performance and profitability. Seylan Bank also recently reported a Rs. 543.301 m Profit after Tax for 2009 representing an increase of 250% over the previous financial year.