ComBank Group income grows 71% for 2022 | Sunday Observer

ComBank Group income grows 71% for 2022

12 March, 2023

The Commercial Bank of Ceylon Group has ended 2022 with a solid operational performance with its assets growing by Rs. 516.063 billion or 26.02% to approach Rs 2.5 trillion.

The gross income grew by 71.31% to Rs 280.387 billion and interest income improved 67.44% to Rs 222.393 billion, with the sharp depreciation of the Sri Lanka Rupee exerting a distortionary impact on some key indicators.

In a filing with the Colombo Stock Exchange (CSE), the Group reported that the value of its loan book had grown by Rs 151.239 billion or 13.81% over the 12 months ending December 31, 2022, assisted by the impact of the sharp depreciation of the Rupee on foreign currency loans and advances.

Discounting the impact of the Rupee depreciation, the loan book recorded a marginal growth during the year, amidst a sharp decrease in credit to the private sector. Deposits had increased by Rs 505.103 billion or 34.30%, with the depreciation of the Rupee also accounting for part of the growth.

The Group made a provision of Rs 71.924 billion for impairment charges and other losses, an increase of Rs 46.784 billion or 186.10% over the Rs 25.140 billion provided in respect of 2021.

This resulted in net operating income reducing by 5.47% to Rs 64.712 billion for the 12 months and by 24.90% to Rs 13.147 billion for the fourth quarter, despite the fact that total operating income for the year had improved by a robust Rs 43.038 billion or 45.98% to Rs 136.637 billion.

Commercial Bank Chairman Prof. Ananda Jayawardane said the domestic macroeconomic pressures emanating from the country’s deteriorating external financing position exerted severe stresses on the foreign currency liquidity and the capital adequacy of banks, making it necessary for managing liquidity to be given priority in the year under review.

Commercial Bank Managing Director and CEO Sanath Manatunge said that a substantial portion of the impairment charge is on account of Government Securities denominated in foreign currency, in view of Sri Lanka’s Sovereign rating downgrade and the debt restructuring program currently being negotiated by the Government.

According to the Group’s financial statements for 2022, despite the heightened challenges of the fourth quarter of the year, gross income for the three months grew by 94.41% to Rs 84.814 billion while interest income improved by 97.14% to Rs 72.136 billion, partly due to an increase in interest-earning assets, rise in interest rates and higher foreign currency income due to the depreciation of the Rupee.

The Group’s profit before tax of Rs 24.505 billion for the year reflected a drop of 25.65% over 2021. Although the income tax rate increased to 30% for the second half of 2022, the impact of income tax on the Group’s results reduced due to a reversal of the deferred tax computed at 24% for the previous year. In other key indicators, the Bank’s net assets value per share increased by 18.99% to Rs 164.30 from Rs 138.08 as at end 2021.