Financial Times - ComBank reports strong results for first half of 2006

The Commercial Bank, its subsidiaries and associate companies, have reported strong profit growth for the first half of 2006, following healthy growth in exchange profit and net interest income.

The Bank Group announced a pre-tax profit of Rs 2,567.1 million for the first half of 2006 as against Rs 1,460.0 million reported in the corresponding period last year, a growth of Rs 1,107.1 million or 75.83 percent. Post-tax profit of the Group rose to Rs 1,475.1 million for the first half of 2006 from Rs 873.9 million, a growth of Rs 601.2 million or 68.8 per cent.

Explaining the substantial increase in pre-tax profit of the Group Commercial Bank's Senior Deputy General Manager (Finance and Planning) Ranjith Samaranayake said this was partly due to the profit from the sale of part of the investment in DFCC Bank shares during the second quarter of the year and the recognition of mark to market gains which arose as a result of transferring another portion of DFCC Bank shares, to the trading portfolio of the bank.

The all inclusive net income of the Group rose to Rs 5,547.3 million in the first half of 2006 as against Rs 3,794.3 million reported in the corresponding period last year, reflecting a growth of Rs 1,753.0 million or 46.2 per cent.

Elaborating on the mark to market gains on transferring investments to the trading portfolio of the bank, Samaranayake said: "The transfer was made following the Bank's decision to dispose of these shares in due course.

Accordingly, it was mark to market and the gains were recognized, falling in line with the guidelines of the Central Bank in the segregation of investments into trading and investments."

The operating expenses of the Group which amounted to Rs 1,968.3 million in the first half of 2005 rose to Rs 2,316.2 million at the end of the second quarter of this year. This was a growth of Rs 347.9 million or 17.68 per cent. The increase in operating expenses was mainly due to the inflationary trends in the country, the Bank said.

The provision for loan losses recorded a marginal increase from Rs 133.5 million in the first half of 2005 to Rs 173.0 million in the first half of 2006.

The Bank's Bangladesh operations continued to be very successful and repatriated a profit of US$ 1 million for the first half of 2006. The branch network was also further expanded with the opening of two more branches.