Lending-focused ComBank posts robust 3Q balance sheet growth

• Group’s 9-month gross income up 30.88% to Rs.256bn
• Loan book increases by Rs.51bn in 3Q to Rs 1.23tn
• Deposits cross Rs.2tn. milestone

A heightened emphasis on lending has seen the Commercial Bank Group increase gross loans and advances by Rs. 51.404 billion in the third quarter of 2023 at a monthly average of Rs. 17.135 billion, growing its loan book by 4.33 percent over three months to Rs. 1.239 trillion and reversing the trend of the first half of the year.
The Group’s deposits crossed the Rs. 2 trillion milestone in the same period, growing by Rs. 79.808 billion or 4.07 percent to Rs. 2.038 trillion as at 30th September 2023, achieving a monthly average increase of Rs. 26.603 billion in the third quarter.

The Group, comprising of Sri Lanka’s biggest private sector bank, its subsidiaries and an associate, reported in a filing with the Colombo Stock Exchange (CSE) that total assets increased by Rs. 63.343billion or 2.57 percent over the three months to reach Rs. 2.526 trillion as at 30th September, once again reversing the trend of the first half of the year.
Gross income at Rs. 255.963 billion reflected an increase of 52.66 percent since 30th June 2023, and an improvement of 30.88 percent over the corresponding nine months of 2022, while interest income at Rs.224.570 billion was up 48.91 percent over the figure for the first half of the year, and an improvement of 49.46 percent from a year ago, the Group said.  Interest expenses increased by 44.39 percent since 30th June 2023 and by 87.19 percent from a year ago to Rs. 163.688 billion for the nine months under review. As a result, net interest income, at Rs. 60.882 billion, was marginally down by 3.08 percent over the corresponding period of 2022, while the third quarter’s net interest income of Rs. 23.432 billion reflected an improvement of 6.02 percent over that of the corresponding quarter of 2022. Total operating income of the Group declined by 16.74 percent to Rs. 86.450 billion for the nine months of 2023, an improvement over the decline of 27.03 percent reported at the end of the second quarter of the year. In contrast, total operating income for the third quarter at Rs. 35.930 billion was an improvement of 3.83 percent over the corresponding three months of the previous year. Similarly, net operating income for the nine months improved by 17.65 percent to Rs. 60.668 billion, and by 33.08 percent to Rs. 23.359 billion in the third quarter despite the Group making a provision of Rs. 25.782 billion for impairment charges and other potential losses for the nine months.
Total operating expenses for the nine months increased by 22.91 percent to Rs. 31.976 billion, with personnel expenses, depreciation and amortisation and other operating expenses rising by 14.82 percent, 17.12 percent and 38.18 percent respectively. Consequently, the Group reported an operating profit before taxes on financial services of Rs. 28.692 billion for the nine months, an improvement of 12.30 percent. 

Taxes on financial services increased by 4.39 percent to Rs. 3.665 billion mainly due to the introduction of the Social Security Contribution Levy of 2.5 percent in October 2022. Nevertheless, the Group achieved a profit before income tax of Rs. 25.031 billion for the nine months, an improvement of 13.59 percent. An increase in the income tax rate to 30 percent from 24 percent for the Group’s Sri Lankan operations, resulted in net profit decreasing by 4.51 percent to Rs. 14.764 billion for the nine months. For the third quarter of 2023, the Group posted pre- and post-tax profits of Rs. 10.939 billion and Rs.6.473 billion respectively, which represent increases of 26.30 percent and 3.03 percent. Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs. 22.909 billion for the nine months, an improvement of 10.95 percent while profit after tax for the same period reduced by 7.86 percent to Rs. 13.303 billion. In other key indicators, the bank’s Tier 1 Capital Ratio and Total Capital Ratio stood at 11.536 percent and 14.502 percent respectively as at 30th September 2023, both above the statutory minimum ratios of 10 percent and 14 percent respectively. The bank’s interest margin reduced to 3.21 percent for the nine months under review compared to 3.74 percent reported for the year 2022. Its return on assets (before tax) stood at 1.26 percent and return on equity at 8.63 percent for the period reviewed. In terms of asset quality, the bank’s impaired loans (Stage 3) ratio stood at 6.11 percent compared to 5.25 percent at end 2022. In terms of liquidity, the bank’s consolidated liquid assets ratio (Sri Lankan Operations) stood at 45.04 percent, compared to the minimum requirement of 20 percent.