ComBank makes steady start to 2020

Healthy growth in business volumes and an extraordinary contribution from other income, before the slowdown attributed to the COVID-19 pandemic, have enabled the Commercial Bank of Ceylon PLC to make a steady start to 2020, despite the continuing increase in impairment charges quarter-on-quarter.

In a media release on Thursday, the bank said operating profit before taxes for the quarter ending March 2020 totalled Rs. 6.239 billion, reflecting a decline of 4.63 per cent. However with taxes on financial services reducing by 42.83 per cent for the quarter under review due to the abolition of Nation Building Tax (NBT) from December 2019 and Debt Repayment Levy (DRL) from January 2020, the institution posted a profit before income tax of Rs 5.229 billion for the three months, an increase of 9.51 per cent from the same 2019 period.

Post-tax profit grew by 22.62 per cent to Rs. 3.707 billion, with the increase in the tax-exempt component of income being higher in the reviewed quarter in comparison with Q1 of 2019.

The bank reported a gross income of Rs. 39.444 billion for the three months ending March, a growth of 12.87 per cent. Interest income growth was flat but the bank’s interest expenses, at Rs 19.466 billion, reflected an achievement of a 1.43 per cent reduction during the quarter reviewed.

The depreciation of the Sri Lanka Rupee coupled with a revaluation of the bank’s foreign currency assets and liabilities, resulted in the bank posting an exchange profit of Rs. 6.514 billion, which helped convert a net loss of Rs. 389.309 million in other operating income in Q1 2019 to net income of Rs 6.587 billion in the three months under review.

Commenting on the performance in the quarter reviewed, Commercial Bank Chairman Dharma Dheerasinghe said: “Although the impact of the shutdown of businesses necessitated by the COVID-19 pandemic is not yet reflected in the top line performance of the bank because we had relatively normal volumes up to the middle of March, we did witness a continuing worsening in the prospects for certain business sectors.”

Its Managing Director S. Renganathan disclosed that the bank is currently in the process of assessing the potential impacts of the COVID-19 pandemic on lending, adding that the bank was able to adapt very quickly to provide customers safe and convenient access to services during the crisis through multiple channels.