ComBank Group revenue passes milestone Rs.150 bn in ‘difficult’ 2019
View(s):The Commercial Bank Group ended 2019 with the performance milestone of gross income surpassing Rs.150 billion for the first time, but substantially higher impairment charges and the impact of a full year of Debt Repayment Levy (DRL) in a year the bank describes as “difficult for the Bank and the country,” saw declines in profit indicators.
Comprising Commercial Bank of Ceylon PLC, its subsidiaries and associates, the group reported top line growth of 7.94 per cent to Rs. 150.741 billion for the 12 months ending December 2019, with interest income, the main source of fund-based operations, up by Rs. 10.763 billion or 9.06 per cent to Rs.129.288 billion.
Total operating income improved by 4.35 per cent to Rs.67.687 billion before impairment charges, the group said in a filing with the Colombo Stock Exchange (CSE). Impairment charges increased by Rs.2.498 billion or 28.28 per cent to Rs. 11.332 billion, and DRL by Rs. 1.819 billion to Rs. 2.469 billion in the 12 months, exerting pressure on profit before tax (PBT), which eventually declined by 11.93 per cent to Rs.22.984 billion.
However, profit after tax (PAT) at Rs.17.420 billion for the year reflected a decline of 2.48 per cent due to income tax for the period reducing by 32.45 per cent largely due to gains from a Government decision, announced by the Department of Inland Revenue to exempt interest income on Sri Lanka Development Bonds from income tax, the group said in a media release.
“Nevertheless, the group paid Rs.12.819 billion as corporate taxes in respect of the 12 months reviewed, which accounted for over 42 per cent of its profit before taxes. However, the bank continued to maintain the same dividend per share since 2012,” it said.
Commenting on the mixed fortunes witnessed by the banking industry in the concluded year, Commercial Bank Chairman Dharma Dheerasinghe said: “The performance of a systemically important bank mirrors the dynamics of the market in which it operates, but what separates the exceptional from the rest is how a bank navigates the challenges. Our decline in profits is directly attributable to higher provisioning and higher levies by the state. In all operational indicators, the bank has weathered the turbulence well to end the year as strong and as stable as it ever was.”
The Bank’s Managing Director S. Renganathan said funding, liquidity management and financial capital management played a crucial role in facing the challenges of the year under review. “In an environment inhospitable to credit expansion, the bank strategically invested excess liquidity in both Rupees and foreign currency in government securities,” he said. “Similarly, the modest increase in Risk Weighted Assets meant that the bank was able to efficiently manage its capital and end the year with an adequate capital base to facilitate the expected growth rebound in 2020.”