The Bank of Ceylon (BoC) has recorded spectacular results for the first six months ended 30th June 2010. The bank's total asset growth has been valued at Rs. 48 billion for the last 6 months. With regards to Net Loans the bank has lent Rs. 65 billion which is a phenomenal growth when compared to industry performances and is slightly above figures which is again a firm indicator of the public’s trust placed in the bank, also a deposit growth of Rs. 22 billion for the first 6 months has been recorded.
Taking these figures into account the Sunday Times Supplements Desk spoke to Mr. Asoka Rupasinghe, Chief Financial Officer of the BoC to find out further about the bank's recent financial performances whilst also gaining an in-depth insight into his recent research findings about the BoC's performance against the banking industry in general.
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| Mr. Asoka Rupasinghe, Chief Financial Officer of the BoC |
"With the present declining trend experienced in AWPLR, Exchange Rates and Treasury bill rates etc. the yield on the secondary market has been very low. As a public sector bank BoC currently remains very liquid. However when the money market does not offer good rates there is a very competitive environment created among the banking sector to park their money.
When compared with that of the last quarter for this quarter our total income has risen by Rs. 2 billion which is yet another record breaking high with industry performances. When comparing results with the current year's 6 months and last year's same period the industry experienced a negative growth due to the high interest regime experienced last year and the low interest regime experienced this year, however the BoC has recorded the lowest negative growth which is further encouraging news for the bank.
When comparing our interest income for the second quarter over the first quarter this amounts to Rs 798 million. This too is very promising. One must always keep in mind that in a low interest regime only the strongest will survive and these figures have certainly done the talking in proving this to be true", says Mr. Rupasinghe.
Moving away from the dependence on the interest margin, which is a highly risky element of income which fluctuates according to market swings promoting non interest income, has become part and parcel of the bank's corporate plans. The BoC being a public lending institution cannot price according to its wishes due to the fact that the bank is heavily involved in priority lending and low yielding yet required by the economic circumstances.
Due to reasons such as this even despite the bank having a very good asset and deposit growth its profitability is always at stake. Being a public sector bank the BoC also services the under informed banking population, which forms a costly segment which the bank has to continuously service irrespective of the profitability.
"Due to the fact that our non-interest income is of high value, we have minimized the market risk posed by the interest rates sensitivity. The bank's NPL ratio is at 4.7% which too is good when compared to the rest of the industry. Our RoAE is relatively good when compared with peer banks in the industry and stands at 17.6%. Our loan yield stands at 11.4% which is low compared to the rest of the industry. This is due to our existing loans being re-priced due to our initiatives to support the government's nation building efforts. This fact should be taken into account when comparing our figures with the rest of the banking industry.
Despite all constraints the BoC however has forged ahead and is the most sound and stable banking entity in the banking industry today and this year's performance further justifies this fact, in more ways than one. Another very important fact to take note of is the risk factor associated with regards to earning profits which is an area that is not visible in our public disclosed financial information.
However Sri Lanka is still in the process of working towards IFRS (International Financial Recording Standards) compliance, and therefore does not fully highlight the level of risk that an organization has taken. The BoC however is in the lowest risk taking status thanks to its collateral quality, risk management practices and the government exposures. We are proud of our performance as a public sector institution further stated Mr. Rupasinghe. |
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