Sri Lanka’s Bank of Ceylon profits double, bonds losses not seen

ECONOMYNEXT – Profits at Sri Lanka’s state-run Bank of Ceylon rose 101.6 percent to 4.43 billion rupees in the March 2016 quarter from a year earlier, helped by lower loan loss provisions, and losses from a large bond portfolio was not visible, interim accounts show.

Interest income rose 16.3 percent to 32.3 billion rupees and interest expenses rose at a faster 17.1 percent to 18.9 billion rupees and net interest income rose 15 percent to 13.6 billion rupees.

Fee and commission income fell 18 percent to 1.86 billion rupees.

Trading gains fell from 504 million rupees from 243 million rupees.

Loan loss provisions were sharply down at 586 million rupees, from to 4.1 billion rupees a year earlier.

The bank reported only 1.2 billion capital losses despite having a 262 billion rupee bond portfolio.

Bonds classified as available-for-sale (AFS) fell from 16.2 billion rupees to 14.9 billion rupees and 247 billion rupees of bonds were placed in the ‘held to maturity’ portfolio, where losses made when interest rates rise are not accounted for.

Losses on the AFS portfolio are adjusted against the equity.

Bank of Ceylon has a history of not accounting for both losses and profits from most of its bonds, partly to protect its capital from being eroded by government levies, when windfall profits are declared when BOP crises end and interest rates fall, long term watchers of the bank said.

Group gross assets rose 1.9 percent to 1.59 billion rupees. Net assets also rose 5.6 percent to 86.0 billion rupees, with most of its bonds not marked-to-market. (Colombo/May13/2016)





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