31 August 2016 12:02 am
Cargills Bank Limited narrowed its losses to Rs.38 million during the quarter ended in June 30, 2016 (2Q16) from Rs.89.5 million loss during the corresponding quarter last year as the margins improved and other incomes too came in handy, the interim results showed.
But the higher expenses continued to weigh on the bottom-line. On a quarter-on-quarter (QOQ) basis too, the losses narrowed as the bank made a loss of Rs.86 million in the March quarter. The loss per share narrowed to 7 cents from 20 cents a year ago. During the quarter, the bank made a cash call via a rights issue to be in line with the Central Bank’s minimum capital requirement of Rs.10 billion by January 1, 2016. However, the rights issue was said to have been under-subscribed forcing the promoters to make a private placement of shares thereafter to raise Rs.5.8 billion in fresh capital.
Via this private placement the promoters—Cargills Ceylon PLC and C.T. Holdings PLC—had injected Rs.3.9 billion in fresh equity, taking their stake in the bank up to 65 percent.
However, a single shareholder could hold only up to 10 percent in a licensed commercial bank, the Central Bank rules say. The Central Bank may have given a special approval for the promoters to breach the single shareholder limit. The only other exception to the single shareholder limit is the Union Bank PLC where United States based Culture Financial Holdings Limited holds 70 percent.
Cargills Bank had a core capital base of Rs.9.9 billion as of June 30.
Meanwhile, the core banking operations of the bank during the quarter fared well with the net interest margin increasing from 3.22 percent to 5.40 percent during the six months.
The net interest income rose by 138 percent year-on-year (yoy) to Rs.217.1 million. The bank gave Rs.3.0 billion worth of loans, an increase of 42 percent during the six months. The bank, on a standalone basis, now has a loan book of Rs. 10.2 billion.
The quality of the loan portfolio also improved as the gross non-performing loan ratio fell to 0.6 percent from 1.31 percent in December 2015.
The deposits too grew by a similar amount to Rs. 6.9 billion. The low cost deposit base, the Current And Savings Account (CASA) ratio improved to 23.6 percent from 20.6 percent in December 2015, which also bodes well for the margin increase.
The net fees and commission income too rose by 166 percent yoy to Rs. 19.3 million. The trading portfolio, which mainly consists of government securities and shares investments in other companies, made a loss of Rs.2.6 million. Meanwhile, the operating costs rose by 46 percent yoy to Rs.260.6 million and out of which, personnel costs rose by 58 percent yoy to Rs.108.7 million.
The bank operates with 306 employees and 11 branches. Three chief executive officers also left the bank since its start of operations in 2014. The state-controlled private sector pension fund, the Employees’ Provident Fund had 4.98 percent stake in the bank as of June 30 being the third largest shareholder.
Meanwhile, for the six months ended June 30 the bank incurred a net loss of Rs. 123.6 million or 23 cents loss per share, narrowing from Rs.160.3 million loss a year ago.
ear ago.