Sri Lanka’s Bank of Ceylon net up 34.8-pct in June

ECONOMYNEXT – Profits at state-run Bank of Ceylon, the country’s largest lender by assets, grew 35.5 percent from a year earlier to Rs4.9 billion helped by loss provisions reversals, but net interest income fell amid rising rates.

Group interest income rose 14.1 percent to Rs33.4 billion in the quarter and interest expenses rose at a faster 24.9 percent to Rs16.4 billion, slowing net interest expense grew only 0.2 percent to Rs12.89 billion.

The bank grew customer loans 5.7 percent to Rs900 billion from Rs851 billion in the six months to June.

It is also one of the biggest holders of government securities. During the six months, it cut financial investments – held to maturity, to Rs235 billion from Rs246 billion in June.

There was only Rs15.7 billion in the available-for-sale portfolio, which is marked to market.

However, when interest rates rise, the holding cost of the portfolio is reflected in net interest income.

Sri Lanka’s interest rates are correcting after being held down by term repo terminations and outright money printing in 2015 as the budget deficit expanded.

The bank reversed Rs180 million of loan loss provisions, compared to Rs3.4 billion, provided last year, helping boost profits.

Fee and commission income was also down 13 percent to Rs1.25 billion. (Colombo/Aug15/2016)
 

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