ComBank posts income of Rs 39.4 bn, a growth of 12.87% | Daily News


ComBank posts income of Rs 39.4 bn, a growth of 12.87%

Makes steady start to 2020 with pre-COVID-19 gains
Chairman Dharma Dheerasinghe and Managing Director S. Renganathan
Chairman Dharma Dheerasinghe and Managing Director S. Renganathan

The bank has reported a gross income of Rs 39.444 billion for the three months ending 31st March 31, 2020, recording a growth of 12.87%. Interest income growth remained predictably flat, up just 0.83% to Rs 31.892 billion, but the Bank’s interest expenses, at Rs 19.466 billion, reflected an achievement of a 1.43% reduction during the quarter reviewed, attributable to timely re-pricing of liabilities as well as an improvement in its CASA ratio. This enabled the Bank to generate net interest income of Rs 12.426 billion, an improvement of 4.59%.

A 4.34% depreciation of the Sri Lanka Rupee against the US Dollar in the three months reviewed as against an appreciation of 4.27% recorded in the first quarter of 2019, coupled with a revaluation of the Bank’s foreign currency assets and liabilities, resulted in the Bank posting an exchange profit of Rs 6.514 billion, which helped convert a net loss of Rs 389.309 million in other operating income in Q1 2019 to net income of Rs 6.587 billion in the three months under review.

At the same time, a loss of Rs 2.348 billion was recorded from trading in the quarter reviewed due to unrealised losses on forward foreign exchange contracts entered into by the Bank.

As a result of the higher impairment charges, the Bank’s net operating income declined by a marginal 0.38% to Rs 12.775 billion, despite the fact that total operating income had grown by a robust 31.64% to Rs 19.320 billion.

Operating profit before taxes at Rs 6.239 billion reflected a decline of 4.63%, but with taxes on financial services reducing by 42.83% to Rs 1.010 billion for the quarter under review due to the abolition of Nation Building Tax (NBT) from December 2019 and Debt Repayment Levy (DRL) from January 2020, the Bank posted a profit before income tax of Rs 5.229 billion for the three months, an increase of 9.51%. Profit after tax grew by 22.62% to Rs 3.707 billion, with the increase in the tax-exempt component of income being higher in the reviewed quarter in comparison with Q1 of 2019.

Commercial Bank Chairman Dharma Dheerasinghe said: “Although the impact of the shutdown of businesses necessitated by the COVID-19 pandemic is not yet reflected in the top line performance of the Bank because we had relatively normal volumes up to the middle of March, we did witness a continuing worsening in the prospects for certain business sectors.”

Managing Director S. Renganathan disclosed that the Bank had increased its CASA ratio to 39.81% from 37.10% at the end of last year, even as it recorded extremely healthy deposit mobilisation in the reviewed three months.

“The Bank was able to adapt very quickly to provide customers safe and convenient access to services during the crisis through multiple channels,” he said.

Total assets of the Bank increased by Rs 63.919 billion or 4.61% at a monthly average of Rs 21.3 billion to Rs 1.451 Trillion.

Gross loans and advances grew by Rs 28.744 billion or 3.12% since end 2019 to Rs 949.201 billion at the end of the three months under review.

Total deposits recorded a growth of 4.87% or Rs 51.326 billion over the three months to reach Rs 1.105 Trillion as at 31st March 2020, reflecting average monthly growth of over Rs 17 billion.

In other key indicators, the Bank’s gross NPL ratio increased to 5.27% from 4.95% at end 2019 and 4.14% at end of first quarter 2019, while its net NPL ratio increased similarly to 3.24% from 3.0% at the start of the quarter.

The Bank’s Total Tier 1 capital ratio stood at 11.495%, comfortably above the revised minimum requirement of 9% imposed by the regulator.

As a group, Commercial Bank, its subsidiaries and associates reported profit before tax of Rs 5.438 billion, an improvement of 8.35% and profit after tax of Rs 3.814 billion, reflecting growth of 19.54%.

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