Bank of Ceylon posts Profit Before Tax of Rs. 27.5 Bn.
Bank of Ceylon has reported Rs. 27.5 billion Profit Before Tax (PBT) for the nine-month period ended September 30, 2022 as per its unaudited quarterly financials.
This performance has been achieved despite many headwinds caused by unforeseen challenges that erupted in the economic and social landscape during the period. Despite never experiencing economic and operating environmental challenges prevailed; the net interest income grew by 32% to Rs. 107.9 billion contributing 72% to total operating income. The increase in interest rates in line with the upsurge in policy rates and materializing the volume growth reported in private sector advances in previous year resulted in 54% growth in interest from loans and advances which denotes 68% of total interest income.
Interest income from investments boomed up YoY to Rs. 102.6 billion and the major portion of it was derived through Treasury Bills and Bonds. As rupee depreciation is around 81% for the period, net exchange gains derived through currency conversion represents a considerable portion in non-fund based income amounting to Rs. 27.5 billion.
The operating expenses of Rs. 33.3 billion mainly consists of personnel costs, assets maintenance expenses, deposit insurance and other overhead expenses. 16% YoY increase in operating expenses represents mostly from escalations in personnel cost in line with comforting the Bank’s human resource against increase in cost of living.
Operating profit before VAT on financial services amounted to Rs. 35.1 billion which is 18% reduction YoY. Value added tax on financial services of Rs. 7.7 billion has been charged for the period resulting in Rs. 27.5 billion Profit Before Tax (PBT). For the 3Q -2022 the PBT of Rs. 5.6 billion has been generated after deducting Rs. 2.5 billion VAT on financial services.
Income tax for the period showed 6% increase even though PBT depicted decline than previous year as the over provision for income tax relating to the year 2020 was adjusted in the first quarter of the year 2021 in line with income tax rate reduction from 28% to 24%. During the period the Bank’s total assets grew by 16% and reached Rs.4.4 trillion, preserving its industry leadership.
“Focusing more on maintaining the portfolio quality and with the view of arresting the non-performing facilities being transferred to hardcore level, the Bank setup a Business Revival unit during the last year and continued to support the revival of business which were hardly hit by adverse economic impacts,” stated the Chairman Bank of Ceylon, Rattwatte.
“This initiative not only benefited the Bank but also the economy of the country as it has been able to revive many businesses back to their feet and thereby has ensured the job security of many.”
“The other side of the coin we focused on during the year was boosting the local economy via supporting SMEs. Hence, during the period we continued to focus on fueling the growth of this sector through offering a holistic value proposition extending beyond mere financial support”
The Bank’s deposit base during the year has increased to Rs. 3.3 trillion with a 16 % growth and 68 % of the deposit base comprises local currency deposits. Even though the Balance 32% which denotes foreign currency deposits stood at Rs. 1,050.8 billion. General Manager/ CEO of the Bank of Ceylon K. E. D. Sumanasiri, highlighted that “the Bank’s approach on digital service delivery has now reached a more promising phase. A greater surge is experienced in the customer adoption to digital and virtual channels during the pandemic and we see the momentum continues.”
Current and saving deposit (CASA) base which generates funds at low cost represents 32%. Return on Assets (ROA) ratio of the Bank stood at 0.9% while reporting a 11.5% Return on Equity (ROE) ratio resulting in a decline YoY as the bottom-line performance of this year is on a lower scale than previous year. Despite cash flow deferments in loan installments, the Bank was able to maintain a better trade -off between the liquid assets and its liabilities. All liquidity ratios were also maintained above the regulatory norms. The Group Financial Statements comprise a consolidation of its nine subsidiaries and its interest in five associate companies. Being the parent company, Bank of Ceylon places the major role in the Group and denotes more than 99% of the Group’s assets base. For this year’s nine months period ended by September, 30, Group has reported PBT of Rs. 27.3 billion.