Financial Times

DFCC profits gain in first quarter


DFCC Bank recorded a net profit of Rs.468 million for the three months ended 30 June 2009, an increase of 35% over the corresponding period in 2008. A DFCC statement says that despite an 8.1% reduction in interest income on loans and advances during the current period, the net interest income of Rs.770 million in the current quarter was a 13% increase over the comparable period.

The statement also said that despite a contraction in the credit portfolio which mirrors the general trend in the Sri Lankan banking industry, DFCC was able to improve its net interest income through proactive liability and liquidity management. DFCC chose to shed expensive time deposits and increase the current allocation to government securities to benefit from the higher yield that prevailed earlier in the year.

According to the statement, DFCC increased its operating profit before taxes by 17.7% compared with the previous period through cost control and the cessation of general provisioning mandated by the Central Bank (CB) which has been built up to the maximum required level. However, the consolidated profit attributable to equity holders after minority interest in the current period was Rs.479 million, a reduction of 6.9% over the comparable period mainly due to the elimination of dividends received from Commercial Bank of Ceylon as a consolidation adjustment and the lower profit after tax contribution from Commercial Bank in the current period.

The DFCC statement said the combined gross advances of the Bank and DFCC Vardhana Bank Ltd (DVB) as at June 30, 2009 amounted to Rs. 57,831 million, recording a marginal reduction of 1.4% in the three months which ended June 30, 2009, primarily due to the contraction of portfolio in DFCC by Rs.1,213 million.

The portfolio of DVB decreased by Rs.404 million. Gross approval of loans and advances including finance leases for the current period was Rs.2,802 million compared to Rs.2,749 million in the comparable period.

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