Strong loan growth lifts Cargills Bank June profits
The profits at Cargills Bank Limited more than doubled during the quarter ended June 30, 2018 (2Q18), as the lender recorded some robust new loan growth and stretched the margins. But the loan impairments and operating expenses rose significantly.
The Cargills group entity reported a profit after tax of Rs.52.5 million for the Apriljune period, compared to Rs.19.7 million in the corresponding period last year – an increase of 167 percent.
The lender reported a net interest income of Rs.531.3 million, up by a robust 49 percent over the same period, last year.
Meanwhile, the net fee and commission incomes also rose sharply by 84 percent year-onyear (YOY) to Rs.41.5 million, as the bank ramped up new product offerings, which can generate fee incomes.
The provisions made for possible bad loans and other losses jumped 88 percent YOY to R.62.9 million.
However, the bank managed to contain its gross non-performing loan ratio to 3.14 percent from 3.55 percent during the six months ended June 30, 2018.
The better non-performing loan ratio may have been a result of the strong growth in new loans as the bank gave Rs.3.8 billion loans during the six months to June.
This is an 18 percent growth in the loan book.
Cargills Bank has an asset base of Rs.36.3 billion, up from 32.5 billion in December 2017.
The bank also managed to expand its margins as the net interest margin rose to 5.87 percent, from 5.53 percent in December 2017.
Meanwhile, Cargills Bank reported a net profit of Rs.70.8 million for the first half of 2018, up 15 percent from the same period last year. The net interest income rose by 45 percent YOY to Rs.992.9 million.
The bank said it received Rs.240 million interest income from investments in government securities, an increase of 156 percent, despite the discontinuation of the notional tax credit facility by the new Inland Revenue regulations.
Meanwhile, the bank grew its deposit base by Rs.4.4 billion or 23.4 percent.
The bank has a total deposit base of Rs.23.2 billion.
Cargills Bank has 19 branches, including the eight in-store branches at selected Cargills Food City outlets.
Further, over 350 Cargills Food City outlets continue to serve as contact points of the bank.
Cargills Ceylon PLC and its ultimate parent CT Holdings PLC together hold a 65 percent stake in Cargills Bank, while the Employees’ Provident Fund has a 4.98 percent stake being the second largest shareholder after the promoters.