BOC records satisfactory results in 1H | Sunday Observer

BOC records satisfactory results in 1H

30 August, 2020
Acting General Manager D. P. K. Gunasekera
Acting General Manager D. P. K. Gunasekera

The Bank of Ceylon (BOC) concluded the first half of the year again earning industry leadership in terms of assets, deposits, advances and revenue.

Despite the challenging economic conditions, the Bank has reported the highest industry growth rates in revenue, deposits and advances for the first half of the year. The revenue of the Bank for the period was Rs. 118.3 billion, an YoY increase of 2.4%. The Bank reported a Profit Before Tax of Rs. 6.9 billion and Profit After Tax of Rs. 5.8 billion for 1H-2020 notwithstanding the consequences of the Covid-19 pandemic.

However, the Bank’s net interest income showed 18% decrease YoY mainly due to accounting for the day one loss on Covid-19 moratorium and increase in interest expense in line with growth of the deposit base. Due to the stability and trust earned from the public, the Bank experienced more deposits coming to the Bank given the instability created in the market due to pandemic related economic disruptions, causing interest expense to rise.

The impact of the moratorium was accounted against the interest income based on the modification method given in the Sri Lanka Financial Reporting Standard (SLFRS) and the resultant day one loss of Rs. 6.0 billion has been adjusted to interest income.

Operating expenses contracted by 7% YoY. Many cost controlling and rational approaches in expense items were adopted in this extraordinary situation. However, the Bank had to make an impairment charge of Rs. 14.7 billion for the loans and advances by accounting for a significant increase in credit risk.

Despite all these challenges the Bank’s asset base grew by 11% to Rs. 2.7 trillion, backed by a 14% surge in the loan book. The Bank’s loan book stood at Rs. 1.8 trillion and Government and private sector lending have contributed to this growth.

The Bank’s deposit base which represents 23% of the industry increased during 1H, 2020, despite the low interest rates prevailing in the market.

The Bank’s deposit base of Rs. 2.2 trillion represents 32% of Current and Savings deposit (CASA) base which generates funds at low costs. This reflects the trustworthiness built in the customer mind regarding BOC as the market leader.

The Bank has reported an NPA ratio of 5.35%for 1H, 2020 demonstrating its robustness in monitoring and recovery measures of loans and advances even in a traumatic situation.

The Bank’s role in passing the benefits of the moratorium and the special low interest working capital loan announced by the CBSL to facilitate the revival of the Covid-19 hit businesses and individuals is also unparalleled and commendable considering that it is the bank with the largest customer base with over 13.7 million accounts.

Although the period under review is the most challenging period in the recent decade faced by all economies around the world and that Sri Lanka is no exception, the Bank through its half year performance has showcased its resilience and the stability to withstand any extraordinary and challenging circumstances.