Cargills Bank recorded a modest post-tax profit of Rs. 71 million for the 9 months ended September 30, 2018.
This reflects a growth of 56% over the corresponding period of last year, after discounting the one-off gain of Rs. 481million from the disposal of its subsidiary.
Net Interest Income of Rs. 1,530 million improved by 46%, reflecting increased income from a larger loan portfolio, interest rate benefits from currency swaps and the impact of the inflow of Rs. 1 billion from the disposal referred to. Net Fee- based Income of Rs. 115 million for the 9 months reflected an increase of 43%. Most of this was attributable to income from growth in the loan portfolio and to higher guarantee commissions. This income would have been substantially higher if not for the delay in the launch of credit cards.
Other income for the nine months grew 23% when the exceptional gain in 2017 is excluded, an important contributor being increased earnings on foreign exchange.
Impairment charges increased 223% from Rs 73 million in 2017 to Rs 237 million in 2018.
Growth in the loan portfolio, non-performance by some large customers and delayed settlements on other loans contributed to this. The bank’s NPA ratio increased from 3.55% at 31 December 31, 2017 to 5.78% at September 30 2018. This is receiving close attention; management considers the increase temporary. The bank stringently assesses credit quality and strengthens monitoring and recovery to contain NPAs at an acceptable level.
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