ECONOMYNEXT – Net profits of Sri Lanka’s DFCC Bank increased by 312 percent to 1.14 billion rupees in the September 2021 quarter from a year earlier, with falling interest expenses and higher fee income, and lower provisioning, interim accounts showed.
DFCC reported earnings of 3.64 rupees per share for the quarter. The share closed 2.83 percent down at 65.20 rupees on Friday (29).
In the nine months to September the bank reported earnings of 10.53 rupees per share on total profits of 3.31 billion rupees which grew 64 percent from 2.02 billion a year earlier.
In the September quarter interest income fell 8 percent to 8.9 billion rupees, interest expenses fell 17 percent to 5.8 billion rupees while net interest income increased by 17 percent to 3.1 billion rupees.
The bank provided 939 million rupees for loan losses, down from 1.1 billion rupees for the same quarter last year and 2.5 billion rupees for the half year.
The bank said impairment provision for the period ended 30 September 2021 was LKR 2,532 Mn compared to LKR 2,661 Mn in the comparable period
“The drop is primarily due to the investments matured during the period” Chief Executive Lakshman Silva told shareholders.\
“In order to address the potential future impacts of COVID – 19 on the lending portfolio, the Bank has made an adequate impairment provision as at 31 December 2020 by introducing changes to internal models to cover unseen risk factors in the highly uncertain and volatile environment including additional provisions made for the exposures to risk elevated sectors”
Silva said the bank is following the same method and basis, impairment provisions were increased in response to the third wave of the pandemic and related matters.
However, with the best practices that were adopted in granting new credit and by providing proactive solutions to the impacted clients Silva said the bank was able to report a Non Profit Loan ratio of 5.18 percent in September 2021 compared to 5.56 percent in December 2020.”
Fee and commission income jumped 21 percent to 704 million rupees from 581 million a year earlier.
The bank said The staff at the Head office and the branch network working continuously over the period has assisted the bank to increase non-funded business and helped the priority sectors of the country to continue with their business activities uninterruptedly.
This effort was fruitful as it resulted in an increase in net fee and commission income” Silva said.
Other operating income made of dividends, forex gains fell 27 percent to 131 million rupees in the quarter.
DFCC group gross assets grew 7 percent to 502.4 billion rupees in the nine months to September. Net assets fell 2 percent to 165.74 billion rupees.
DFCC had a total capital adequacy of 13.3 percent, higher than the 12.5 percent required of which, Tier I was 9.1 percent, higher than the 7 percent required. (Colombo/Oct 30/2021)