ECONOMYNEXT- State-run Bank of Ceylon (BoC), the largest lender in Sri Lanka has recorded a net profit of 13.1 billion rupees for the December quarter, up 25.3 percent a year ago mainly supported by the tax reversals.
Total income for the quarter grew 80 percent to 146.3 billion rupees.The bank’s bonds are listed on the Colombo Stock Exchange.
Interest income in the quarter grew by 84.9 percent to 134.4 billion rupees and interest expenses grew at a faster 173.6 percent to 115.1 billion rupees, squeezing net interest income, which fell 36.9 percent to 19.2 billion rupees.
“The upsurge in deposit rates increased the cost of funding, YoY interest expense hiked by 121 percent and as considerable portion of FDs are reprised by now, during the latter part of this year interest expense moved up by nearly threefold than previous year,” the bank said in an interim review.
The group loan book fell 3.7 percent to 2.3 trillion rupees, from a year ago while deposits rose 16.4 percent to 3.4 trillion rupees.
Provisioning for bad loans and advances grew 20.6 percent to 5.3 billion rupees
“The impairment provision made to compensate the ECL from loans and advances amounted to Rs.70.7 billion during the year ended 31 December 2022,” the bank said.
“Consequently, the gross loans to impairment provision reserve ratio stood at 10 percent against the 6 percent reported by end 2021.
The bank had provided for both sovereign bonds and Sri Lanka Development Bonds.
Bank-level bad loans grew to 5.27 percent from 5.08 percent a year earlier.
Net fee and commission income fell 8.7 percent to 4.6 billion rupees. Net gains from trading grew 206.7 percent to1.2 million rupees.
“As rupee depreciation is around 81 percent for the period, net exchange gains derived through trading activities and currency conversion represents considerable portion in non-fund based income…” the bank said.
Profit before income tax was down 56.5 percent to 3.68 billion rupees.
There was a 9.4 billion rupee income tax reversal in the quarter, compared to a tax expense of 2.1 billion rupees a year earlier.
“VAT on financial services for the year increased by 22 percent to 11.0 billion rupees as the VAT rate increased from 15 percent to 18 percent,”
“The Bank paid 281.3 million rupees to newly introduced Social Security Contribution Levy of 2.5 percent during the year while paying 6.7 billion rupees as the Surcharge tax imposed as on-off tax charge during the year.
“Deferred tax adjustment of 14.5 billion rupees was made during the year mainly due to deferred tax booked on specific provision made on foreign currency denominated sovereign instruments, loans and advances and adjustment made on current tax rate in line with increase of income tax rate from 24 percent to 30 percent.”
Net assets at end-December stood at 271.4 billion rupees, up 27 percent.
Return on Assets (ROA) ratio of the Bank stood at 0.76 percent while reporting a 14.1 percnet Return on Equity (ROE) ratio resulting a decline YoY as the bottom-line performance of this year is in low scale than previous year.
Tier I Capital was at 12.4 percent in December 2022, down from 14.25 percent and Total Capital ratio was at 15.4 percent down from 17.7 percent from a year ago. (Colombo/Mar02/2023)