ComBank closes in on Rs.3tn asset mark with strong 1Q25 performance

Chairman Sharhan Muhseen

MD/CEO Sanath Manatunge

Commercial Bank of Ceylon Group made a characteristically strong start to 2025, recording a healthy profit and balance sheet growth in the first quarter of the year.
Comprising of Sri Lanka’s largest private sector bank, its subsidiaries and an associate, the group reported in a filing with the Colombo Stock Exchange that the assets reached Rs.2.999 trillion as at March 31, 2025.
Gross income for the quarter grew by 9.85 percent to Rs.88.10 billion, while interest income improved by 3.14 percent to Rs.72.60 billion. Interest expenses reduced by 10.09 percent to Rs.38.38 billion, as a result of the repricing of liabilities amidst the lower rates regime that prevailed, generating a 23.53 percent growth in net interest income, which amounted to Rs.34.21 billion for the three months reviewed.
Total operating income grew by 33.40 percent to Rs.46.62 billion but the group’s provision for impairment charges and other losses was increased by 110.44 percent to Rs.7.23 billion.
Operating income for the three months, at Rs.39.39 billion, reflected a growth of 25.00 percent, while the group’s ability to keep operating expenses down to Rs.12.80 billion, an increase of just 6.20 percent, resulted in operating profit before taxes on financial services improving by 36.64 percent to Rs.26.59 billion.
Taxes on financial services increased by 48.18 percent to Rs.4.03 billion, resulting in group profit before tax of Rs.22.56 billion for the three months, an improvement of 34.77 percent.  With income tax increasing by 27.92 percent to Rs.7.58 billion, the group reported a net profit of Rs.14.97 billion for the quarter reviewed, reflecting a bottom-line growth of 38.52 percent.
Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs.21.88 billion and profit after tax of Rs.14.50 billion for the three months, posting growths of 35.10 percent and 38.71 percent, respectively.
The group had achieved substantial growth in its loan book in the first quarter, continuing the trend of 2024, had reversed a net loss of Rs.1.9 billion on trading incurred in the corresponding quarter of the previous year, nearly tripled net other operating income and continued to maintain the best CASA ratio, despite the greater demand for fixed deposits. 
Total assets of the group increased by Rs.122.85 billion or 4.27 percent over the three months under review to reach Rs.2.999 trillion as at March 31, 2025. The group ended the quarter with gross loans and advances of Rs.1.642 trillion, a growth of Rs.116.75 billion or 7.65 percent over three months, at a monthly average of Rs.38.92 billion. The loan book growth over the preceding 12 months was Rs.326.02 billion, with a year-on-year (YoY) growth of 24.77 percent, averaging Rs.27.17 billion per month. 
Meanwhile, deposits grew by Rs.105.82 billion or 4.59 percent to Rs.2.412 trillion in the three months reviewed, reflecting an average monthly growth of Rs.35.27 billion and YoY growth of 12.67 percent, with a monthly average growth of Rs.22.60 billion over 12 months.
In key performance ratios, the CASA ratio of the bank improved to 39.51 percent as at March 31, 2025, from 38.07 percent at end-December 2024 and consistently remains one of the best in the industry, the bank said.
The bank’s Tier 1 capital ratio as at March 31, 2025 was 14.276 percent post growth in risk-weighted assets in its balance sheet, while its total capital ratio stood at 18.014 percent. Both ratios are comfortably above the regulatory minimum ratios of 10 percent and 14 percent, respectively and the bank has already announced the first Tier 2 green bond by a bank in Sri Lanka to further strengthen the regulatory capital.
The bank’s liquidity coverage ratio for the quarter reviewed stood at 539.62 percent for rupees and 345.42 percent for all currencies, both well over the statutory minimum ratios of 100 percent. The bank’s net stable funding ratio stood at 181.23 percent as at March 31, 2025, nearly double the minimum statutory requirement of 100 percent.
The bank’s net interest margin increased to 4.74 percent for the quarter, compared to 4.27 percent reported for 2024 and 4.22 percent a year ago. The bank’s return on assets (before tax) improved to 3.12 percent compared to 2.54 percent a year ago, while the return on equity improved to 21.29 percent, from 19.53 percent for the corresponding quarter of the preceding year.
The bank’s cost to income ratio, excluding taxes on financial services, stood at 27.17 percent, as against the normalised ratio of 33.85 percent for 2024, while the figure inclusive of taxes on financial services was 36.00 percent for the quarter, in comparison with 41.89 percent for the preceding year, when the effect of the net loss on restructuring of the SLISBs is discounted. 
The impaired loans (stage three) ratio improved to 2.58 percent, compared to 2.76 percent at end-2024 and 5.59 percent a year ago, while its impairment (Stage 3) to Stage 3 loans ratio further improved to 65.56 percent, from 64.61 percent as at December 31, 2024 and 44.60 percent as at March 31, 2024.