The following commentary relates to the interim non-audited financial statements for the nine months ended September 30, 2019, presented in accordance with Sri Lanka Accounting Standard 34 (LKAS 34) on ‘Interim Financial Statements’.
DFCC Bank recorded a profit after tax of Rs. 2,217 million for the period ended 30 September 2019 before the adjustment for the fair value loss on Commercial Bank of Ceylon (CBC) in comparison to profit after tax of Rs. 2,723 million recorded in the comparative period. The Bank’s profit after tax with the adjustment for the fair value loss on CBC shares amounted to LKR 1,594 million for the current period against Rs. 1,791 million in the comparative period.On the same basis, the Group recorded a profit after tax of Rs. 1,765 million for the period ended September 30, 2019 compared to Rs. 1,955 million in the comparative period.
The Bank recorded a total operating income amounting to Rs. 9,839 million for the period ended 30 September 2019, compared to Rs. 9,296 million for the comparative period, recording an increase of 6%. Fees and commission income grew by 3% to Rs. 1,468 million.
Operating expenses increased to Rs. 5,531 million from Rs. 4,862 million in the comparative period. The impairment provision increased to Rs. 795 million. The Bank’s NPL ratio as at September 30, 2019 was 4.84% compared to 3.28% recorded as at December 31, 2018.
Fair value losses of Rs. 1,400 million and a net fair value gain of Rs. 1,675 million were recorded on account of equity and fixed income securities, respectively.
DFCC Bank’s total assets showed a growth of 7% since December 2018 by Rs. 27,547 million to Rs. 402,455 million as of 30 September 2019. Within this, the Bank’s loan portfolio grew by Rs. 20,273 million to Rs. 270,007 million compared to Rs. 249,734 million as at December 31, 2018 recording an increase of 8%. The Bank did not pursue aggressive growth particularly to sectors that exhibited stress, as a result of its stance on prudent lending.
The Bank’s deposit base as at September 30, 2019 amounted to Rs. 232,834million, which is a 4% decline from Rs. 242,238 million as at December 31, 2018.
As a result of the declining trend in overall deposit base, the Bank recorded a loan-to-deposit ratio of 116% in September 2019 from 103% in December 2018. The Bank’s CASA ratio, which represents the proportion of low-cost deposits from total deposits, stood at 24.5% on September 30, 2019. The Bank has access to medium- to long-term concessionary credit lines. When these concessionary term borrowings are added to deposits, the ratio improved to 31.2%.
As at September 30, 2019, the Bank recorded Tier 1 and total capital adequacy ratios of 11.03% and 16.06%, respectively, which is well over the minimum regulatory requirements of 8.5% and 12.5%, respectively.