Cargills Bank records Rs 71m PAT - 3Q, 2018 | Sunday Observer

Cargills Bank records Rs 71m PAT - 3Q, 2018

Cargills Bank recorded a modest post-tax profit of Rs 71m for the nine months ended September 30, 2018. This reflects a growth of 56% after discounting the one-off gain of Rs 481m from the disposal of a subsidiary.

Net Interest Income of Rs 1,530m 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 1b from the disposal referred to.

Net Fee-based Income of Rs 115m for the nine months reflected an increase of 43%, 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 9 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 73m in 2017 to Rs 237m 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 2017 to 5.78% at 30 Sep 2018. Management considers the increase temporary. It stringently assesses credit quality and strengthens monitoring and recovery to contain NPAs at an acceptable level.

Operating expenses increased by 27%. Higher depreciation costs and personnel expenses accounted for this increase. The employee head count at September 30, 2018 was 524 against 418 at 30 Sep 2017.

The Rs 24.5b loan portfolio at 30 Sep 2018 was 18% higher than at December 31, 2017. Credit growth was moderated by a shift in focus to secured lending, an exit from large low yielding facilities and a re-deployment of funds in the SME segment.

It’s deposit base, at Rs 18b on September 30, 2018, remained flat compared to the base at December 31, 2017. Rupee denominated deposits grew by a modest Rs. 2b, which was cancelled out by outflows in foreign currency deposits. It commenced, during the third quarter, a deposit campaign targeting six month, one year and fiveyear deposits. This promotion has been well received and we are seeing a steady inflow of deposits. It also unveiled its new ‘Podihitiyo’ Children’s Savings Account on World Children’s Day, offering attractive interest rates for children’s savings accounts. Targeted promotions to attract deposits will continue. Its CASA ratio stood at 16% at September 30, 2018.

The Capital Adequacy Ratio continued to be well above the minimum regulatory requirement during the period. At 30 Sep 2018, the Tier I Capital Ratio was 32.3% and the Total Capital Adequacy Ratio was 32.7%. It remains focused on the need to productively deploy the capital buffer it presently carries. The Bank won three awards at the recently concluded LankaPay Technovations Awards 2018, demonstrating the success of its thrust in technological innovation and operational excellence.

The Bank also signed a strategic partnership agreement with Flemingo Duty Free and Supreme Paysez to roll out the Alipay mobile payment gateway in the Colombo Airport’s duty free shops of Flemingo.

The Bank recently joined RippleNet to facilitate cross-border inward remittances to Sri Lanka using Ripple’s blockchain based enterprise software solution, enabling safe and secure cross-border transactions.

The Bank has invested in a state-of-the-art Card Management System which is now fully operational.