Commercial Bank of Ceylon PLC saw its total operating income for the first quarter (1Q24) grow by 38.20 percent to Rs. 34.947 billion.  
The Group made provisions of Rs. 3.436 billion for impairment charges and other losses, a reduction of 49.45 percent from the corresponding quarter’s figure of Rs. 6.797 billion in 2023 which included a substantial provision made for foreign currency bonds. As a result, net operating income increased by 70.43 percent to 
Rs. 31.511 billion.

With total operating expenses for the three months amounting to Rs. 12.054 billion which reflected a growth of 12.89 percent, the Group reported operating profit before taxes on financial services of Rs. 19.457 billion for the quarter, achieving a growth of 149.06 percent.
Taxes on financial services increased by 153.64 percent to Rs. 2.719 billion, leading to a profit before income tax of Rs. 16.738 billion for the three months at Group level, an improvement of 148.28 percent.
Income tax for the three months increased by 148.89 percent to Rs. 5.929 billion, resulting in a net profit of Rs. 10.808 billion for the quarter, reflecting a growth of 147.95 percent.

“Factors such as the strengthening of the rupee and changes in impairment provisioning, necessitated by the dynamics of the country’s macro-economic situation, continue to impact key indicators more than usual,” Commercial Bank’s newly-appointed Chairman Sharhan Muhseen said. “Our first quarter figures reflect well on the bank’s and the group’s ability to keep our focus on identified priority areas to generate equitable results for all stakeholders.”

Commercial Bank Managing Director/CEO Sanath Manatunge added, “Our first quarter performance illustrates the results of strategies implemented to align the bank’s portfolios towards improving the contribution from fund-based operations, which helped us to record a noteworthy improvement in our bottom line. Consequently, key operational indicators and performance ratios continue to be impressive, and we are confident that we will continue to build on our role as a domestic systemically important bank.”

Commercial Bank of Ceylon PLC ended 1Q24 with a loan book of Rs.1.316 trillion, continuing the bank’s focus on lending in a period where the appreciation of the rupee negatively impacted the value of the loan book and resulted in a contraction of the balance sheet.
The group reported a net increase of Rs.20 billion in its loan book in the first three months of the year and Rs.129 billion in the 12 months ending on March 31, 2024, averaging Rs.10.75 billion per month and achieving year-on-year (YoY) growth of 10.87 percent in gross loans and advances.

Comprising of Sri Lanka’s biggest private sector bank, its subsidiaries and an associate, the group reported in a filing with the Colombo Stock Exchange that the value of deposits declined by a marginal 0.33 percent to Rs.2.141 trillion in the first quarter of 2024, largely due to the appreciation of the rupee against the dollar but had grown by Rs.117 billion or 5.80 percent over 12 months. However, the total rupee deposits of the group recorded a growth of Rs.41.256 billion or 2.94 percent during the first quarter of 2024.
Total assets stood at Rs.2.616 trillion as at March 31, 2024, a decrease of 1.48 percent consequent to a revaluation of the group’s assets in foreign currency in line with the appreciation of the rupee in the period under review.

The group posted a gross income of Rs.80.208 billion for the quarter under review, down 4.68 percent over the corresponding period of 2023, primarily due to a decrease in interest income to Rs.70.391 billion, which reflected a YoY decline of 7.31 percent, due to the considerable reduction in market interest rates on loans and government securities.

However, a noteworthy improvement of over 3 percent in the CASA ratio of the bank from 37.08 percent a year ago to 40.51 percent as at March 31, 2024 coupled with a repricing of deposits in keeping with market movements, saw interest expenses reducing by 25.05 percent to Rs.42.693 billion for the quarter under review. Consequently, net interest income for the three months improved by 45.97 percent to Rs.27.698 billion, the group said.
Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs.16.195 billion and profit after tax of Rs.10.451 billion for the quarter, posting growths of 155.56 percent and 155.47 percent, respectively, for the reviewed quarter.

The bank reported its Tier 1 and total capital ratios at 11.366 percent and 14.873 percent, respectively as at March 31, 2024, both above the statutory minimum ratios of 10 percent and 14 percent, respectively. The bank’s interest margin improved to 4.22 percent for the quarter, compared to 3.32 percent for 2023. The bank’s return on assets (before tax) stood at 2.54 percent, compared to 1.27 percent for 2023 while its return on equity grew to 19.53 percent, from 9.78 percent for 2023.

In terms of asset quality, the bank’s impaired loans (Stage 3) ratio stood at 5.59 percent, compared to 5.85 percent at end 2023, while its impairment (Stage 3) to Stage 3 loans ratio improved to 44.60 percent as at March 31, 2024, compared to 43.22 percent at end-2023. In terms of liquidity, the bank’s consolidated liquid assets ratio (Sri Lankan operations) stood at 43.52 percent, compared to 46.06 percent at the end of 2023. The minimum statutory requirement for liquid asset ratio is 20 percent.

The largest private sector bank in Sri Lanka and the first Sri Lankan bank to be listed among the Top 1000 Banks of the World, Commercial Bank operates a strategically-located network of branches and 964 automated machines islandwide and is the largest lender to Sri Lanka’s SME sector. Commercial Bank has the widest international footprint among Sri Lankan banks, with 20 outlets in Bangladesh, a Microfinance company in Myanmar, and a fully-fledged Tier I Bank with a majority stake in the Maldives.