ECONOMYNEXT – Sri Lanka’s DFCC Bank said profits fell 19 percent to 623.8 million rupees in the June 2021 quarter from a year earlier, due to higher operating cost owing to pandemic related spending and higher provision of loan.
DFCC reported earnings of 1.98 rupees per share for the quarter.
In the six months to June the bank reported earnings of 6.89 rupees per share on total profits of 2.17 billion rupees which grew 24 percent from 1.75billion a year earlier.
In the June quarter interest income fell 13 percent to 8.7 billion rupees, interest expenses fell 18 percent to 5.8 billion rupees and net interest income also fell 1 percent to 2.9 billion rupees.
The bank provided 1.07billion rupees for loan losses, up from 812.6 million for the same quarter last year and 1.57 billion rupees for the half year.
The bank said the impairment provision for the period ended 30 June 2021 was 1.65 billion rupees compared to 1.51 billion in the comparable period.
DFCC had changed internal provisioning models “to cover unseen risk factors in the highly uncertain and volatile environment including additional provisions made for the exposures to risk elevated sectors,” Chief Executive Lakshman Silva told shareholders.
He said the bank following the same method and basis, impairment provisions were increased in response to the third wave of the pandemic, which started in the June quarter.
Operating costs had gone up with transport provided to staff and expenses in following health guidelines.
“During the year the Bank also created multiple channels to enhance the service delivery to customers through a strong digital drive providing access to uninterrupted banking services during these trying times,” ,” Silva said.
“This resulted the increase in IT related expenses with the infrastructure upgrades.
“The process automation and workflow management systems introduced during this period facilitated effective cost control measures which resulted in managing the operating expenses at these levels.”
The bank reported a non-performing loan ratio of 5.46 percent as of end June, lower than 5.56 percent in end-December 2020.
Fee and commission income jumped to 699 million rupees from 376 million a year earlier.
Other operating income made of dividends, forex gains fell 46 percent to 316 million rupees in the quarter.
DFCC group gross assets grew 5 percent to 492.4 billion rupees in the six months to June. Net assets fell 2 percent to 165.4 billion rupees.
DFCC had a total capital adequacy of 14.2 percent, higher than the 12.5 percent required of which, Tier I was 9.9 percent, higher than the 7 percent required. (Colombo/August 11/2021)