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Sri Lanka’s Commercial Bank net up 20-ct in March on forex gains

ECONOMYNEXT – Profits at Commercial Bank of Ceylon, Sri Lanka’s largest private bank by assets grew 20 percent to 3.76 billion rupees partly helped by foreign exchange gains despite slow low growth and a 6 billion rupees loan loss provision.

Commercial Bank reported earnings of 3.66 rupees for the quarter. Commercial Bank stock closed at 54.80 rupees, up 4.70 rupees.

Interest income grew 1.18 percent to 32.3 billion rupees, interest expenses fell 1.4 percent helping the bank grow net interest income 5.47 percent to 12.7 billion rupees.

Loans grew 2.63 percent to 917 billion rupees from December March 2020.

The bank provided 6.6 billion rupees for bad loans, up from 1.8 billion rupees a year earlier.

Sri Lanka’s central bank cut rates and printed money in March/April 2018 and July/August triggering runs on the rupee.

The currency collapse lend to a contraction in domestic demand and bad loans as sales fell at companies and costs also rose due to the currency collapse.

Fee and commission income was flat at 2.4 billion rupees.

There was a loss of 2.3 billion rupees in trading which includes forex losses (on borrowings) but also gains of 6.6 billion rupees on other income indicating forex gains or profits of rupee dollar swaps that give protection for borrowings.

Many Sri Lankan banks have borrowed dollars and passed on the risk to the central bank through swaps, helping show a higher volume of high risk gross official reserves, analysts say.

Gross assets grew 4.97 percent to 1.36 billion rupees while net assets grew only 0.7 percent to 137 billion rupees. (Colombo/May16/2020)