ECONOMYNEXT – Sri Lanka’s DFCC Bank has reported profits of 2.1 billion rupees for the March 2023 quarter, up from 486.6 million rupees from a year earlier, helped by higher interest margins.
The DFCC group reported earnings of 4.97 rupees per share for the quarter, up from 1.49 rupees from a year ago.
Fee and commission income rose 71 percent to 1.4 billion rupees, according to interim accounts filed with the Colombo Stock Exchange.
DFCC Bank interest income for the quarter grew 132 percent to 25.9 billion rupees, up from 11.1 billion, while interest expenses grew at a faster 174 percent to 17.5 billion up from 6.3 billion rupees, allowing the bank to grow net interest income grew 75 percent to 8.3 billion rupees.
DFCC said it provided 4.6 billion rupees for bad loans for the quarter.
Sri Lanka’s market interest rates rose sharply after March 2022 as corrective measures were applied after as the currency collapsed after two years’ money printed to mis-target rates and target an output gap.
“Strategically, the Bank increased the fixed income investment portfolio, which contributed significantly to an increase in investment interest income,” DFCC said.
“In line with the increase in the AWPLR over the past 12 months, the interest margin increased from 3.80 percent in March 2022 to 5.93 percent by March 2023.”
The impaired loan (stage 3) ratio has increased from 4.36 percent in December 2022 to 4.80 percent in March 2023, a continuation of the trend in the prevailing economic condition.
“To address the current and potential future impacts of the current economic conditions on the lending portfolio, the Bank made adequate impairment provisions during the period by introducing changes to internal models to account for unseen risk factors in the current highly uncertain and volatile environment,” shareholders were told in the interim accounts.