The Commercial Bank Group has reported operating profit before impairment charges and taxes of Rs 19.476 billion for the first half of 2019, a 9.45% increase over same period of 2018.
The Commercial Bank of Ceylon PLC, its subsidiaries and associates recorded gross income of Rs 73.587 billion for the six months ending June 30, 2019, an increase of 13.31% over the figure for the corresponding period of 2018, restated as Rs. 64.944 billion in line with the requirements of SLFRS 9 which was implemented from the fourth quarter of that year.
Despite slower loan book growth and an increase in non-performing loans, interest income grew by 12.90% to Rs 64.622 billion. Changes in the deposit mix with a continuing shift to time deposits resulted in interest expenses rising by a higher rate of 16.08% to Rs 40.477 billion.
Consequently, net interest income improved by 7.95% to Rs. 24.146 billion. A hefty 195.42% increase in net gains from trading due to a favourable market rate movement contributed to other income growing by 71.66% to Rs. 3.134 billion, the Bank said.
Operating profit before taxes on financial services amounted to Rs. 13.949 billion, a negative growth of 3.31% over the corresponding period of last year.
However, with taxes on financial services increasing by as much as 39.52% to Rs 3.604 billion, which included Rs 1.168 billion as debt repayment levy (DRL), group profit after tax reduced by 16.85 % to Rs 6.673 billion for the six months compared to the first half of 2018. Total taxes for the period reviewed exceeded Rs 7.282 billion, reflecting an effective tax rate of a mammoth 52%.
“Our six-month results mirror the challenges faced by key sectors of the economy and demonstrate that even a bank of the size and strength of Commercial Bank is not immune to the vagaries of the market,” Commercial Bank Chairman Dharma Dheerasinghe said.
The Bank’s Managing Director/CEO S. Renganathan said, “While we remain concerned at the need for higher provisioning every quarter for sectors that are under the pressure of debt servicing, we are confident that our strategic responses to the needs of the period will minimise the adverse impact on our performance.”
Total assets of the Group grew by 3.50% to Rs 1.366 trillion. Net loans and advances reduced by a marginal 1.54%. Deposits grew by 4.30% since December 31, 2018. At Bank level, Commercial Bank reported profit before tax of Rs. 10.046 billion, down 15.49%, and net profit of Rs. 6.466 billion, a reduction of 19.83% compared to the first half of 2018.
The Bank’s gross NPL ratio increased to 4.86% as at June 30, 2019, while its net NPL ratio increased from 2.47 % to 2.96%.