ComBank makes strong start in 2021

The Commercial Bank Group has generated strong growth in fund-based operations in the first quarter of 2021, with the continuing trend of interest expenses reducing at a significantly higher rate than interest income combined with judicious management of core banking operations.

Comprising Commercial Bank of Ceylon PLC, its subsidiaries and the associate, the group reported a Gross income of Rs. 41 billion for the three months ending March 31, 2021, with net interest income growing by a substantial 21.08 per cent to Rs. 15.4 billion consequent to interest expenses reducing by 17.14 per cent to Rs. 16.2 billion in contrast to a marginal decline of 2.04 per cent in interest income to Rs. 31.7 billion due to the reduction in interest rates.

“The growth in net interest income was achieved despite a substantial increase in deposits and excess liquidity being invested in low- yielding treasury assets in view of the conditions that prevailed in the market during the three months reviewed,” the bank said in a media release.

The group posted profit after tax of Rs. 6.8 billion for the three months reviewed, a growth of 78.20 per cent. Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs.8.2 billion for the quarter, a growth of 56.51 per cent and profit after tax of Rs.6.6 billion, an improvement of 79.63 per cent.

In his comments, Commercial Bank Chairman Justice K. Sripavan said: “Our performance in the latter part of 2020 laid the foundation for this growth, which has been achieved by a careful balancing of several countervailing factors arising from developments impacting the market and our response to them, including judicious provisioning for impairment on the expected credit losses. We expect to maintain this trajectory of growth in the short term, provided that there are no major shocks ahead of us.”

Commercial Bank Managing Director S. Renganathan added: “Although the bank has reduced the percentage of its loan book under moratorium to approximately 6 per cent, the impact of the third wave of COVID-19 is yet to be ascertained and the bank will be required to factor in these impacts in its decisions while managing interest margins and strategising on its financial assets portfolio and foreign currency operations.”