DFCC Bank 3Q helped by investment...
Development lender-turned commercial bank, DFCC Bank PLC, recorded higher earnings for the quarter ended September 30, 2019 (3Q19) helped by healthy gains from its investment and trading portfolio and lower income tax expenses.
The bank reported earnings of Rs.3 per share or Rs.535.5 million for 3Q19 compared to earnings of Rs.1.87 per share or Rs.474.3 million reported for the same period last year.
The bank’s net interest income rose only by 1 percent year-on-year (YOY) to Rs.3.1 billion as interest expenses rose at a faster pace compared to interest income.
The net fee and commission income also rose by just 2 percent YOY to Rs.523.6 million.
However, the modest gains at core banking level were compensated by higher gains from the bank’s higher trading and investment portfolio despite fair value loss stemming from the bank’s investment in the shares of Commercial Bank of Ceylon PLC.
As a result, the total operating income of the bank during the quarter under review rose 27percent YOY to Rs.3.9 billion.
The bank provided Rs.304.8 million for possible bad loans during the quarter compared to Rs.43.1 million a year ago. For the nine months ended September 30, 2019, the bank provided Rs.797.3 million, up 18 percent YOY.
The bad loans ratio of the bank as at September 30, 2019 was 4.84 percent compared to
3.28 percent as at enddecember 2018.
The total operating expenses for the quarter rose 19 percent YOY to Rs.2.08 billion amid aggressive network expansion and rolling out of new digital banking solutions.
The income tax expense for the quarter fell 46 percent YOY to Rs.331.7 million.
Meanwhile, for the nine months ended September 30, 2019, the banking group reported earnings of Rs.6.18 per share or Rs.1.7 billion compared to earnings of Rs.7.37 per share or Rs.1.9 billion reported for the same period.
The bank expanded its loan book by Rs.20.2 billion to Rs.270 billion during the nine months, which is a growth of 8 percent from end-december 2018.
The deposit base of the bank recorded a negative growth of 4 percent from end-december 2018 to Rs.232.8 billion. The bank’s CASA ratio, which represents the proportion of low-cost deposits from total deposits, stood at 24.5 percent as at September 30, 2019.
DFCC said it has access to medium- to long-term concessionary credit lines. When these concessionary term borrowings are added to deposits, the ratio improves to 31.2 percent as at September, 30, 2019.
The bank recorded Tier 1 and total capital adequacy ratios of 11.03 percent and 16.06 percent respectively as at September 30, 2019, which is well over the minimum regulatory requirements of 8.5 percent and 12.5 percent respectively.
The government holds little over 30 percent stake in DFCC Bank via Bank of Ceylon, Sri Lanka Insurance Corporation, the Employees’ Provident Fund and Employees’ Trust Fund. Hatton National Bank PLC has 14.91 percent in DFCC Bank being the second largest shareholder.