DFCC performs creditably | Sunday Observer

DFCC performs creditably

Chairman Royle Jansz and  CEO Lakshman Silva
Chairman Royle Jansz and CEO Lakshman Silva

* Loan portfolio grows 20% year- on-year

* Posts Rs 2.6b PAT - 3Q, 2018

* Year-on-Year growth of 17% in total assets

The DFCC Group, consists of commercial banking, investment banking, wealth management, information technology, industrial park management and consultancy businesses.DFCC Bank, the largest entity within the group recorded an increase in Profit before tax and Profit after tax of 11% and 1% respectively compared to the previous corresponding period after adjusting for the exceptional gain from sale of Commercial Bank equity shares reported in the previous period, despite substantially higher impairment and taxation provisions.

However, the reported Profit before tax of Rs. 3,792 million and a Profit after Tax of Rs. 2,530 million reflects a decline of 13% and 26% respectively compared to the corresponding period in 2017 after the exceptional gain is accounted for.

The Group recorded a profit before tax of Rs. 4,036 million and profit after tax of Rs. 2,693 million for the nine months ended September 30, 2018.

The Bank recorded a healthy growth of 22% in Net Interest Income to Rs. 10,020 million from Rs. 8,228 million. The overall net interest margin (NIM) improved from 3.6% in 2017 to 3.8% by end of 3rd quarter of 2018.

Total Operating Income increased to Rs. 11,609 million compared to Rs. 10,638 million in the comparative period. The impairment provision during the period increased to Rs. 1,898 million compared to Rs. 1,017 million in the comparable period.

The Bank’s NPL ratio moved up slightly to 3.26% as at September 30, 2018.

Listed shares, Unit trust investments, Investments in treasury bills and bonds are classified as available for sale financial assets and carried at fair value.

Due to the declining trend in the equity market, a fair value loss of Rs. 3,381 million on account of the available for sale equity securities was recorded in other comprehensive income. The Fixed Income securities recorded a fair value loss of Rs. 692 million. Reflecting its financial stability, DFCC Bank’s total assets grew by Rs. 56,287 million year-on-year to Rs. 378,967 million which is a 17.4% growth compared to September 2017, while the Bank’s Loans portfolio grew by Rs. 40,725 million to Rs. 243,401 million compared to Rs. 202,676 million as at 30 September 2017, which is a growth of 20% year-on-year. The Bank’s deposit base reported a substantial increase to Rs. 230,818 million. The Bank’s CASA ratio, which represents low cost deposits over the total deposits of the Bank was 20.1% as at 30 September 2018.

DFCC Bank consistently maintains capital ratio above the Basel III minimum capital requirements. As at 30 September 2018, the Group’s Tier 1 capital adequacy ratio stood at 10.722% while the total capital adequacy ratio stood at 16.067%. DFCC Bank recorded tier 1 and total capital adequacy ratios of 10.360% and 15.732% respectively as at 30 September 2018. These ratios are well above the minimum regulatory requirements of 7.875% and 11.875%.

Return on equity (ROE) at the bank level was 6.8% for Q3 2018, which is an increase from 6.2% recorded in Q2 2018.