Commercial Bank PLC, Sri Lanka’s largest private bank with an asset base of Rs.797.2 billion, saw its December net profit (4Q14) edging up 2 percent year-on-year (YoY) to Rs.3.39 billion, the interim financial accounts released to the Colombo Stock Exchange showed.
The basic earnings per share for the quarter stood unchanged at Rs.3.92.
The net interest income for the quarter under review improved 13 percent YoY to Rs.7.32 billion, helped by lower interest expenses.
The banking group was able to grow its loan book an impressive 21 percent YoY during FY14 to Rs.498.1 billion, which also helped to gain higher interest income.
Commenting on these results, Commercial Bank Chairman Dharma Dheerasinghe said that in the face of challenges on both the domestic and international fronts, the efforts of the bank’s corporate and personal banking teams had resulted in its lending portfolio growing appreciably in the latter part of the year, registering a growth rate considerably higher than in the previous quarters.
“Against a background of sharply declining interest margins, this healthy expansion of volume acted as a boost that raised the bank’s overall profits– a welcome consequence no doubt appreciated by all shareholders,” he said. The banking group’s deposit base grew 17 percent YoY to Rs.529.2 billion in FY14.
The net fees and commission income during 4Q14 rose 23 percent YoY to Rs.1.35 billion. The banking group was able to reduce its trading losses during the quarter 68 percent YoY to Rs.277.5 million.
The net gains from financial investments fell 43 percent YoY to Rs.773 million. On August 31, 2014 Commercial Bank fully acquired Indra Finance (IFL) for a consideration of Rs.916 million. The notes to the financial statements said the finances of IFL have been consolidated in the bank’s comprehensive income and financial position.
The banking group’s FY14 net profit rose 6.4 percent YoY to Rs.11.2 billion amid the net interest income growing 5.5 percent YoY to Rs.27.3 billion.
The net fee and commission income rose 14 percent YoY to Rs.4.85 billion. The earnings per share improved to Rs.13.01 from Rs.12.24.
The bank was able to cut its impairment charges for loans and other losses by 5.38 percent YoY to Rs.4.9 billion in FY14 and 8.42 percent YoY to Rs.1.3 billion in 4Q14. The gross non-performing ratio thus improved to 3.47 percent from 3.88 percent.
The personal expenses during FY14 rose 8 percent YoY to Rs.8.95 billion.
The bank’s Tier I and Tier II capital adequacy ratios stood at 12.93 percent and 15.97 percent, respectively, well above the minimum requirement of 10 and 15 percent.
The bank’s provision for financial VAT and NBT for the year totalled Rs.2.68 billion, an increase of 36.57 percent over the preceding year.
“Income tax, financial VAT and NBT as a percentage of the bank’s profit before financial VAT was 39.32 percent,” a statement by the bank said.
The interim budget of the new government imposed a 25 percent one-off tax on companies that made profits in excess of Rs.2 billion for tax year 2013/14.
The bank announced a cash dividend of Rs.2 per share, both voting and non-voting shares.
The largest shareholder of Commercial Bank as at December 31, 2014 was DFCC Bank, which had a 14.79 percent stake, followed by state-controlled private sector pension fund, the Employees’ Provident Fund, with a 9.73 percent stake.
Franklin Templeton Investment Fund was the third largest shareholder with a 5.92 percent stake.
With a 5.84 percent stake, Indra Silva remained as the fourth largest investor.