Tax cuts boost Sri Lanka’s Bank of Ceylon profits in Dec

ECONOMYNEXT- State-owned Bank of Ceylon (BoC), Sri Lanka’s largest lender, posted 10.63 billion rupee profit for the December quarter, up 13.7 percent a year earlier, helped by tax cuts.

Total income for the quarter fell 5.4 percent to 61.78 billion rupees.

Interest income grew at 2 percent to 56.26 billion rupees due to lending rate caps imposed by the central bank, while interest expenses grew at a faster 5.3 percent to 37.74 billion rupees, squeezing net interest income, which fell 4.2 percent to 18.52 billion rupees.

The group loan book grew 8.2 percent to 1.58 billion rupees, while deposits rose 13.1 percent to 2.03 billion rupees.

Provisioning for bad loans and advances grew 8.3 percent to 2.85 billion rupees.

Bank-level bad loans grew to 4.79 percent from 3.62 percent a year earlier, slightly above the industry average of 4.7 percent.

Net fee and commission income grew 15.2 percent to 5.27 billion rupees. Net gains from trading fell 70.5 percent to 426.03 million rupees.

BoC made an other operating loss of 1.32 billion rupees, down from an income of 3.27 billion rupees a year earlier.

Profit before income tax was down 41.9 percent to 8.54 billion rupees.

There was a 2.06 billion rupee income tax reversal in the quarter, compared to a tax expense of 5.35 billion rupees a year earlier.

The government has made income tax on Sri Lanka Development Bonds exempt with effect from April 1, 2018. BoC is the largest holder of SLDBs, owning nearly 200 billion rupees of the securities at end-2018.

Net assets at end-December stood at 153.98 billion rupees, up 8.3 percent.

BoC group’s return on equity grew to 16.51 percent from 15.87 percent.

The group’s tier 1 capital grew to 10.57 percent from 10.41percent against a required 10 percent, while total capital grew to 15.14 percent from 14.64 percent while 14 percent was required. (Colombo/Mar03/2020)