Solid loan book growth and noteworthy improvements in most key indicators have contributed to Commercial Bank of Ceylon PLC attaining a major banking sector performance landmark in the year ending 31st December 2010, the banking group said.
In a statement it said the bank crossed the milestone Rs 5 billion mark in profit after tax during the year to end FY 2010 with a net profit of Rs 5.5 billion, up 28.3 % over 2009.
The bank’s profit before tax grew by 29.5 % to Rs 9.3 billion. “A welcome resurgence in credit demand and a drop in non-performing advances in absolute terms helped achieve this growth by facilitating a 32.2 % (Rs 4 billion) improvement in net interest income, from Rs 12.41 billion to Rs 16.41 billion,” it said. Total operating income of the bank recorded a 14.7 % growth to Rs 23.1 billion, despite a steep drop in interest rates. There was, however, a decrease in other Income, largely as a result of a drop in capital gains from the sale of treasury bills and bonds compared to the previous year, and a 41.2 % reduction in the exchange profit of the bank due to the appreciation of the Rupee against the US Dollar in 2010.
Commenting on the bank’s performance, Commercial Bank Managing Director Amitha Gooneratne said practically every ratio had improved substantially. “Most noteworthy to shareholders would be the increase in the return on average shareholder funds, which at 17.9 %, is very much higher than the yield on treasury bills,” he said.
The statement said the bank was able to limit the growth in total operating expenses to 6.4 % despite adding 15 new branches to its network in 2010 and the consequent increase in personnel. With income growing at a faster rate than expenses, the bank’s Cost Income Ratio declined more than two percentage points to 54.69 %.
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