Cargills Bank Limited, the banking unit of the Cargills group, turned a net profit of Rs.44.9 million or 5 cents a share for the January – March quarter, recovering from a net loss of Rs.85.7 million incurred during the corresponding quarter last year, the interim results released by the bank showed.
It appears that the rising interest rates bode well for the bank with an asset base of only Rs.22 billion.
Cargills Bank last year received a massive capital infusion of about Rs.6.0 billion from its promoters—Cargills (Ceylon) PLC and CT Holdings PLC to meet the minimum regulatory core capital requirement of Rs.10 billion.
The two entities in concert held 65 percent of the shares of the bank while the Employees’ Provident Fund held another 4.98 percent stake as of March 31, 2017.
The banking group, which also has a licensed finance company—Capital Alliance Finance PLC— expanded its loans and advances by Rs.1.8 billion to Rs.16.6 billion while the deposits also grew by about Rs.700 million during the quarter.
The bank, from this March, started facilitating its account holders to do basic transactions such as deposits, withdrawals and fund transfers via the point of sales counters at Cargills Food City supermarkets.
The bank also launched its mobile banking app enabling the shoppers to make payments for the goods that they purchase at Cargills super markets via the app.
This could attract new customers to the young bank, which has access to over 300 Cargills Food City outlets islandwide.
With the required infrastructure in place, Cargills Bank could become one of the fastest growing commercial banks in Sri Lanka. Meanwhile, the bank’s net interest margin in March stretched up to 6.77 percent from 6.47 percent in December 31, 2016.
The net interest income grew by as much as 108 percent year-on-year (YoY) to Rs.349.7 million while the fee and commission income also grew by 228 percent YoY to Rs.29.4 million.
By March 31, 2017, the bank’s Tier I and Tier II capital adequacy ratios stood at 47.85 percent and 46.87 percent, respectively.