Cargills Bank reported a profit before tax of Rs. 206 Mn for the financial year 2022, recovering from a loss before tax of Rs. 369 Mn in the previous year, driven by robust growth in operating income that offset erosions due to increased provisioning and operating costs.
Total operating income rose 74% year-on-year to Rs. 4.28 Bn on account of growth in both Interest and Fee-based income in similar proportion. The Bank prudently managed its lending portfolio with the intention of preserving liquidity and maintaining asset quality, leading to a slight decline in the portfolio.
Meanwhile robust performance in card operations, trade finance and remittances resulted in 75% year-on-year growth in fee-based income. Mindful of the challenging environment and its impact on customers, the Bank proactively increased its provision cover ratio, resulting in a 114% year-on-year growth in impairment to Rs. 1.46 Bn. The Bank’s Stage 3 Loans (Net of Stage 3 Impairment) to Total Loans ratio consequently improved from 6.43% in 2021 to 4.85% in 2022.
The Bank prudently managed its operating costs to limit the increase to 16% year-on-year, resulting in the Bank’s Cost to Income ratio improving from 82.8% in 2021 to 55.4% in 2022. Consequently, the Bank reported an operating profit before taxes on financial services of Rs 448 Mn.
The Bank maintained healthy capital and liquid asset ratios during the year, reporting a Total Capital Ratio of 22.85% and Liquid Asset Ratio – Domestic Banking Unit of 26.70% as at December 31, 2022.Senarath Bandara, Managing Director/CEO of Cargills Bank commenting on the performance of the Bank stated, “Cargills Bank navigated the uncertain economic climate of 2022 with resilience and pragmatism.
The Bank adopted an agile approach in response to the challenges to seek growth and stability in spite of external pressure.” The Bank continued to expand its network, opening two new branches in Negombo and Anuradhapura, and complemented branch expansion by opening eight new MINI service locations in Cargills Food City outlets.”
Furthermore, in line with its objectives to promote financial inclusion and financial deepening, the Bank launched a mobile branch vehicle to serve underbanked customers in the Central, North Central and Northern provinces.
Ranjit Page stepped down as Chairman of the Board of Cargills Bank in January 2023, having served the maximum term permitted by the Central Bankas a Director on the Board of a bank.
Page said: “Understanding the need of the country, we decided to invest more aggressively in building infrastructure to support the agriculture and dairy farming communities and sought a banking license to support the ecosystem we were building.”
“We applied for a license under the banner of Cargills Agriculture and Commercial Bank, reflecting our vision to be the most inclusive bank by improving financial access for underserved communities across Sri Lanka.”
Richard Ebell, who previously held the position of Senior Director, was appointed as Chairman of the Board. “Our access to the Cargills ecosystem benefits the Bank, and at a societal level, gives its customers increased convenience and ease of banking, opening doors to previously underserved sectors of the population. Through this access, the Bank seeks to bring vibrantly alive its motif ‘Banking on the Human Spirit’,” he said.