Sri Lanka’s DFCC Bank profits halve on bad loans, interest costs

ECONOMYNEXT- Net profits at Sri Lanka’s DFCC Bank Plc fell 54 percent to 516.14 million rupees in the December quarter on higher interest costs and bad loan provisioning, interim financials showed.

The group reported 1.76 rupees in earnings per share for the quarter. DFCC earned 7.62 rupees a share for 12 months ended December, on net profits which fell 26 percent to 2.21 billion rupees.

DFCC’s share closed 10 cents down at 84 rupees on the Colombo Stock Exchange on Monday.

Gross income for the quarter grew 4 percent to 11.41 billion rupees.

Interest income grew 1 percent to 10.41 billion rupees on price controls on loans, while interest expenses increased at a faster 7 percent to 7.26 billion rupees, leading to net interest income falling 10 percent to 3.15 billion rupees.

Bad loan provisioning grew 164 percent to 813.5 million rupees.

Bank-level bad loans grew to 4.85 percent from 3.28 percent, marginally above the industry average of 4.7 percent.

The group loan book grew 9 percent to 272.81 million rupees, while deposits expanded at a slower 2 percent to 247.46 million rupees.

Net fee and commission income grew 15 percent to 654.56 million rupees.

Net gains from trading fell 78 percent to 85 million rupees on lower gains from foreign exchange trading with banks and marked to market losses in a Commercial Bank stake held by DFCC.

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A net loss of 107.03 million rupees on financial instruments at fair value through profit or loss was recorded, from a 470.34 million rupee gain a year earlier.

Net other operating income grew to 231.7 million rupees from a 753.91 million rupee loss on gains from reverse repo transactions and lower foreign exchange losses.

Income tax expenses fell 59 percent to 170.29 million rupees.

DFCC’s return on equity fell to 4.5 percent from 6 percent.

Group Tier 1 capital grew to 11.327 percent from 10.888 percent while the minimum requirement was 8.5 percent.

Total capital ratio fell to 15.778 percent from 16.168 percent against a minimum of 12.5 percent. (Colombo/Feb24/2020)

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