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BoC 3Q net up 8% over massive loan growth, asset quality erodes

18 November 2015 02:32 am - 0     - {{hitsCtrl.values.hits}}

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The state-owned banking giant, Bank of Ceylon (BoC) group posted a net profit of Rs. 5.7 billion for the quarter ended September 30, 2015 (3Q15), up 8.3 percent from a year ago, on the back of a strong growth in its lending book but the asset quality weakened, the interim results showed. The banking group’s net interest income (NII) grew by 23.4 percent year-on-year (yoy) to Rs. 12.7 billion while the net fee and commission income improved by a paltry 1.7 percent yoy to Rs.2.1 billion. 

Trading gains contracted by 38 percent yoy to Rs.1 billion probably due to the mark-to-market losses from the investments in the government securities portfolio. However other operating income rose 65 percent yoy to Rs.3 billion.     
The bank on a standalone basis increased its gross loans and advances by a whopping Rs.102.3 billion during its first nine months to Rs. 879.8 billion while expanding its net interest margin to 3.37 percent from 3.05 percent. 

Leases grew by Rs.12.5 billion while the overdrafts grew by Rs.17.4 billion during the nine months to September 30, 2015. The bank has a Rs.42.7 billion lease portfolio with an exposure of 4.9 percent from the total loan book. 

Meanwhile the personal loans grew by Rs.6.4 billion to Rs.64.3 billion while housing loans grew by Rs.3.4 billion to Rs.41.6 billion. 
Further the loans under special schemes have grown by Rs.21.6 billion to a total portfolio of Rs.57.7 billion. 

Meanwhile, the deposits base grew by Rs.63.6 billion to Rs.997.6 billion by the end of September 2015. The savings deposits grew by Rs.59.4 billion while the term deposits grew by just under Rs.8 billion. The bank has a low cost, Current And Savings Account (CASA) base of 46 percent. 

The bank has an asset base exceeding Rs.1.48 trillion – the largest LCB in the country with over 8,000 employees and 575 branches. 

Meanwhile the bank saw its provision for possible bad loans increasing during the quarter as the provisions for individual customers rose by as much as 168 percent yoy to Rs. 1.5 billion while the collective impairments rose by over Rs.1.7 billion to Rs. 1.77 billion. 

The gross non-performing loan ratio deteriorated to 5.07 percent from 3.78 percent in December 2014. 

Meanwhile, the bank’s capitalization levels too weakened during the period due to aggressive growth in its loans as both Tier I and Tier II ratios fell to 8.35 percent and 11.75 percent respectively from 9.45 percent and 13.55 percent in December 2014. 

The bank has a return on equity of 20.75 percent, amongst the highest in the industry. 

Meanwhile the banking group’s net profit for the nine months ended September 30, 2015 rose by 7.5 percent yoy to Rs.12.2 billion. The NII rose by 39 percent to Rs.37.2 billion. 

The total operating expenses rose by 5.7 percent yoy to Rs.22.6 billion while the personnel cost rose by 17 percent yoy to Rs.13.3 billion.
 
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