''The total operating income for the period stood at Rs.31 billion and shows a 24 percent increase''
Having closed the 75th year on a high note by delivering the highest ever profit by a single entity in Sri Lanka, Bank of Ceylon (BoC) continues to lead its growth course in the first half of 2015 (1H15) with Rs.9.1 billion profit before tax (PBT), achieving a 6 percent growth over the previous year.
Profit after tax (PAT) stood at Rs.6.7 billion, resulting in an 8 percent growth.
The group reported Rs.9 billion PBT, resulting in a 5 percent growth over the corresponding period of the previous year, and the bank dominates the results of the group accounting for 96 percent of total earnings and 97 percent of the group’s assets. The group PAT stood at 6.5 billion, up 7.6 percent.
The total operating income for the period stood at Rs.31 billion and shows a 24 percent increase, which has been accelerated through a 52 percent growth in the net interest income and a 53 percent growth in the other operating income.
The net interest income has increased due to the higher interest income complemented by a 12 percent reduction in interest expenses depicting a greater efficiency in deposit mix management by the bank, which has contributed to improve the net interest margin (NIM) by 36 percent to 3.4 percent on a year-on-year (YoY) basis.
Despite the increase in personnel expenses, the bank has been able to maintain other expenses 17 percent lower than those of the corresponding period in 2014, allowing only a marginal increase of 2 percent in total operating expenses.
With the pride of owning the highest asset base in the country, BoC has grown its total assets by a further 6 percent to Rs.1.4 trillion as of end-June 2015.
Loans and advances accounted for 56 percent of the bank’s total asset base and gross loans stood at Rs.837 billion. Recovering from the slow credit growth in 2014, the loan book has grown by 8 percent during the first half of 2015.
The investment portfolio also showed an upward movement due to increased investment and treasury activities. Deposits accounted for 71 percent of the bank’s liabilities as at end-June 2015 and showed a marginal increase of 1 percent compared to the end-2014 position, which is an 8 percent increase compared to end-June 2014.
The deposit mix has improved favourably achieving a higher CASA mix (current and savings account to total deposits) of 45 percent, resulting in 437 bp increase on a YoY basis.
The bank’s return on average assets (ROAA) ratio stood at 1.3 percent and return on average equity (ROAE) ratio stood at 17.3 percent indicating a slight dip compared to end-2014 mainly due to the increased assets base and the Rs.5 billion capital infusion made in December 2014.
However, the cost to income ratio has reduced from 44 percent to 42 percent indicating improved operational efficiencies.
The bank’s domestic liquid asset ratio was 30.8 percent as of end-June 2015 while the off-shore liquid asset ratio was 28.9 percent standing well above the Central Bank’s required benchmark of 20 percent.
The bank managed to maintain better trade-off between liquidity and interest earning assets. The bank also continued to sustain CAR by maintaining Tier I at 8.4 percent and Tier II at 11.9 percent levels against the Central Bank’s minimum requirements of 5 percent and 10 percent respectively.
During the period under review, Fitch Ratings Lanka reaffirmed the bank’s long-term Issuer Default Rating (IDR) as “BB-”and national long term rating as “AA+ (lka)” stable outlook in view of the strong domestic funding franchise, which is underpinned by its state linkages, high systemic importance, quasi-sovereign status, role as key lender to the government and full government ownership.