DFCC Vardhana Bank (DVB), the retail-banking arm of DFCC Bank, reported a 141% growth in profits-abter- tax in 2009, compared to 2008.
DVB’s profits abter tax was Rs 268 million compared to 111 million in 2008, according to its Profit and Loss Statement and Balance Sheet for 31 December 2009. The bank says it has paid above industry average taxes and reported profit before tax at Rs 779 million in 2009, compared to 438 million in 2008.
“The effective tax rate for the year has been 65.6% which is above the banking industry average. One reason for this high rate of taxation is the ceiling on the loan-loss provision, to 1% of the lending portfolio for income tax purposes,” said the bank in a statement.
DVB also reported a total asset growth of 26.3% in 2009, over 2008, at Rs 31,336 million. However, DVB’s non-performing asset ratio came to 10.8%. The bank said this was due to customers’ debt service capacity reducing because of lower economic demand.
The bank said its cost-income ratio remained at 48.3% despite increased recurrent costs due to expansion of branches and customer service outlets during 2009. The bank also remained excessively liquid with the advance to deposit ratio reaching 68% by end of 2009.
Fee bearing commitments and contingent liabilities grew by 29% in 2009 compared to 2008, and stood at Rs 9,548 million. Time and demand deposits expanded by 16.2% and stood at Rs 22,047 million at end of the year.
In 2010 DVB is looking at expansion in the North and East and is also planning to set up four more branches and 45 Extension Offices during the year.
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