The development financier, DFCC Bank PLC group contracted its net profits by as much as 29.7 percent to Rs. 824.5 million for the quarter ended March 31, 2015 (4Q15) from a year ago due to weakened core-banking operations on the back of falling interest rates, the interim financials released to the Colombo Stock Exchange showed.
The earnings per share (EPS) declined to Rs.3.11 from Rs.4.42 a year ago.
The net interest income (NII) declined by 13 percent year-on-year (yoy) to Rs. 1.67 billion on the back of the falling interest income. The interest income fell 16 percent yoy to Rs.3.8 billion while the interest expenses followed suit by recording a fall of 19.2 percent yoy to Rs.2.1 billion.
The non-interest incomes declined by 4 percent yoy to little over Rs.1 billion during the quarter.
The total impairments for loans and other loans rose by 14.5 percent yoy to Rs. 279.6 million.
During the period, the total operating expenses remained almost unchanged at Rs.1.26 billion but the personnel expenses rose by Rs.118 million to Rs.816.1 million. Meanwhile, for the year ended March 31, 2015, the banking group recorded a net profit of Rs.4.36 billion (EPS of Rs.16.46), an increase of 38.4 percent yoy on the back of a 19 percent growth in its loans and advances.
The group has a loan book of Rs.141.3 billion. But the size of the bank’s loan book is Rs.76.4 billion.
During the FY 2015, the banking group surpassed the Rs.200 billion asset base and as of March 31, 2015 the total asset base stood at Rs.210.6 billion.
Even under the falling interest rates environment, the group’s deposit base grew by 15 percent to Rs.92.7 billion.
DFCC Bank is a project lender whilst its 99.2 percent subsidiary, DFCC Vardhana Bank PLC is operating as its commercial banking arm but the group has now started an amalgamation of operations after the proposed merger between the NDB bank PLC was called off.
Meanwhile, the bank has measured the impact of the Super Gains Tax proposed under the interim budget as Rs.533 million and Rs.837 million for the group.
The NII for the financial year 2015 declined by 15 percent to Rs.6.7 billion.
Most notably, the non-interest incomes rose by 110 percent during the financial year to Rs.3.9 billion.
The total impairments fell by 80 percent to Rs.246.7 billion for the financial year.
The total operating expenses rose by 8 percent to Rs. 4.3 billion.
As of March 31, 2015 the government collectively held 33.54 percent stake in the bank through Bank of Ceylon (14.35 percent), Sri Lanka Insurance Corp. (10 percent) and Employees Provident Fund (9.19 percent).
Hatton National Bank held 12.22 percent stake, becoming the second largest shareholder.