The Bank of Ceylon (BOC) has closed 2016 with a record Rs. 31.2 billion profit before tax with 23% growth. Profit after tax stood at Rs. 24.8 billion resulting in a growth of 43%.
Net operating income for the period reflected an improvement of 16%.
Reduction of 26% in total impairment charges through a reversal in provision following improved Non Performing Loans (NPLs) has also complemented the increase in net operating income. In January 2016, the Statutory Reserve Ratio (SRR) was increased by 150 bps to 7.5% and Standing Lending Facility Ratio (SLFR) and Standing Deposit Facility Ratio (SDFR) also increased during the year up to 8.5% and 7.0%.
The Bank maintained its interest margin at the previous year level of 3.3%. Despite the decline in net fee and commission income by 8%, a 59% growth in other operating income showcased the Bank’s ability of making its targets a reality through various avenues among challenges. This operating income includes Rs.3.1 billion in capital gains from disposal of investments too.
The reversal of impairment charges against Non Performing Advances (NPA) as a result of persistent efforts in recoveries, sturdy follow ups, strengthened by the continuous improvement in credit quality in the branch network has made significant improvements in Gross NPA ratio at the end of 2016 to 2.9%.
Total operating expenses increased by 7% in line with the business expansion, however, cost to income ratio came down to 43% from 45%.
BOC added strength to the Balance Sheet by achieving Rs.1.0 trillion loans and advances base, with this total assets reached to Rs.1.7 trillion.
Loans and advances accounted for 60% of the Bank’s total assets base.
The deposit base accounted for 80% of the Bank’s liabilities as at end 2016. During the year the Bank received a Rs. 5 billion capital infusion from the Treasury, strengthening the Bank’s capital base to Rs. 15.0 billion.