ComBank’s assets cross milestone Rs 1.5 trillion in 1H 2020
View(s):The Commercial Bank of Ceylon Group has reported mixed results for the first half of 2020, with robust top line growth negated by a combination of factors including pressure on interest margins due to reduced credit demand and interest concessions granted as pandemic relief to borrowers, increasing impairment provisions and low yields on surplus liquidity.
The bank group saw its assets grow by 11.19 per cent over the six months to cross the milestone Rs. 1.5 trillion mark in the second quarter of the year while gross income improved by 2.15 per cent to Rs. 75.167 billion in the review period, it said in a media release.
However, with interest income declining by 5 per cent to Rs. 61.393 billion for the six months to end June 2020 and by 11.05 per cent in the second quarter alone, mainly due to recognition of a day one/modification loss on interest concessions offered to customers affected by the COVID-19 pandemic under the special concessions mandated by the Central Bank and the bank’s own concessionary payment schemes, net interest income for the period reviewed reduced by 5.71 per cent to Rs.22.767 billion and by 16.98 per cent to Rs.9.984 billion in the second quarter, adding pressure on net interest margins.
“The ups and downs reflected in our six-month results are symptomatic of the combination of factors that were in play, the pre-pandemic slowing down of business and the consequent rise in impairment charges, and many concessions, voluntary as well as regulator-mandated, that the bank had to provide in support of customers affected by the impacts of COVID-19,” Commercial Bank Chairman Dharma Dheerasinghe said. “There were also other gains in some areas that helped cushion the negative impacts to some extent. We believe this is all par for the course.”
The bank’s Managing Director S. Renganathan elaborated that although total operating income had increased by a respectable 10.34 per cent to Rs. 35.437 billion in the review period, impairment charges and other losses had increased significantly by 67.56 per cent to Rs. 9.261 billion for the six months.
The bank contained operating expenses for the six months to Rs.12.986 billion, a growth of just 2.72 per cent over the corresponding period of 2019, enabling it to post an operating profit of Rs.13.191 billion before taxes on financial services, which reflected a reduction of 5.44 per cent, Mr. Renganathan disclosed. “We believe this is a creditable achievement in the context of the conditions that prevailed,” he said.