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13 August, 2015 07:41 AM Source: Financial Times - Sri Lanka
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Strong second quarter growth in fund based operations has enhanced the half-year performance of Commercial Bank, enabling the largest private sector bank to post profit before tax of Rs. 7.443 billion for the six months ending 30 June 2015, an increase of 14.97% over the corresponding six months of the previous year.
Profit after tax grew by a noteworthy 15.38% to Rs. 5.168 billion on gross income of Rs. 37.017 billion, the bank said in a filing with the Colombo Stock Exchange (CSE).
Figures for the second quarter reflect robust year-on-year (YoY) growth, with profit before tax for the three months up 21.37% to Rs 3.864 billion, and profit after tax growing 20.85% to Rs 2.659 billion, the bank said.
Total interest income for the six months ended 30 June 2015 improved by 2.59% to Rs. 31.788 billion, and with interest expenses reducing by 1.62% to Rs. 17.021 billion in the review period, the bank increased its net interest income to Rs. 14.768 billion, a growth of 7.91%. Net interest income in the second quarter amounted to Rs. 7.535 billion, an improvement of 5.92% over 2Q 2014.
The bank’s loan book net of provisions grew by Rs. 14.499 billion over the six months to Rs. 512.116 billion, and by Rs. 73.906 billion or 16.87% over the preceding 12 months.
Deposits from customers increased by an even more impressive Rs. 39.721 billion or 7.5% since December 2014 to Rs. 569.082 billion, averaging Rs. 6.6 billion per month during the period reviewed.  Deposit growth over the preceding 12 months was Rs. 81.483 billion or 16.71%.
Total assets grew by Rs. 18.231 billion over the six months reviewed to Rs. 813.841 billion as at 30 June 2015. Asset growth over the preceding 12 month period was Rs. 130.261 billion or 19.06%.
“Commercial Bank continues to be one of the strongest mobilisers of savings in Sri Lanka and one of the country’s biggest lenders,” the Bank’s Chairman Dharma Dheerasinghe commented. “The volumes achieved in the first half of 2015, supported by solid fee-based operations are responsible for the significantly improved performance reflected by these figures.”
Commercial Bank’s Managing Director/CEO Jegan Durairatnam added: “Given the progressively reducing interest margins witnessed over several quarters and the appreciation of the rupee in the review period, the bank’s performance becomes particularly noteworthy and is a reflection of the resilience that comes from strong management and a large base.”
Commercial Bank’s other income comprising exchange profit, commission income, recoveries and investment income improved by 5.11% to Rs. 4.798 billion in the six months under review, while total impairment charges decreased by 12.83% to Rs. 2.648 billion.
Net operating income at Rs. 16.918 billion for the six months reflected a growth of 11.21% while total expenses increased by 7.25% to Rs. 8.179 billion, the bank reported.
In other key performance indicators, Commercial Bank improved its gross and net non-performing loans (NPL) ratios to 3.15% and 1.70% respectively from 3.47% and 1.86% as at 31 December 2014, despite interest margins narrowing to 3.70% during the six months reviewed from 3.88% as at December 2014.
The bank’s Tier I and total capital adequacy ratios as at end June 2015 stood at 12.70% and 15.45% respectively despite the growth in Risk Weighted Assets during the review period. These ratios are well above minimum statutory requirements.

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