Combank shows...
Commercial Bank is the largest private sector lender with assets of Rs.1.24 trillion as of September 30, 2018 up 8.6 percent from the beginning of the year. The bank reported 44 percent YOY growth in pre-provision income to Rs.18.3 billion on robust core-banking operations during the quarter under review.
But the net operating income growth decelerated to 23 percent YOY to Rs.14.9 billion due to the substantial increase in the provisions made for possible bad loans.
Individual impairments or provisions made on certain large facilities, which had shown signs of sourness, surged to Rs.3.3 billion for the quarter from Rs.97.3 million in the corresponding quarter last year. Meanwhile, the gross non-performing loan (NPL) ratio rose to 2.83 percent from 1.88 percent at the begging of the year.
“Rising NPL ratios are a concern for the entire industry, and are compelling banks to increase provisioning for bad debts.
In the case of Commercial Bank, NPL ratios are still lower than industry averages, and timely re-pricing of liabilities and strong deposit growth have enabled the bank to keep interest expenditure growth to a significantly lower rate than interest income growth”, said Combank CEO, S. Renganathan.
For the nine months ended September 30, 2018, total provisions rose to a whopping Rs.7.4 billion from just Rs.1.7 billion reported for the corresponding period in 2017. Earnings for the nine months were Rs.13.63 a share or Rs.13.7 billion compared to Rs.12.41 or Rs.11.8 billion reported for the corresponding period last year.
The net interest income for the period was Rs.36.2 billion, up 26 YOY.
The bank remains well capitalised for the forthcoming full implementation of higher capital adequacy ratios under Basel III accord. DFCC Bank PLC has a 13.57 percent stake in Combank as the single largest shareholder while Employees’ Provident has 9.63 percent stake being the second largest shareholder.high net worth investors Indra Silva also has 8.08 percent stake in the bank as the third largest shareholder.