Commercial Bank third quarter 2007

Commercial Bank, associates and subsidiaries have reported pre-tax profit of Rs 5.32 billion at the end of the third quarter, a growth of Rs 1.3 billion or 32.43 per cent over the first nine months of last year.

Profit after tax for the period, at Rs 3.28 billion reflected an even stronger growth of 39.35 per cent or Rs 925.6 million, on a Group turnover of Rs 25.5 billion, which was up Rs 8.5 billion or 50 per cent. On the basis of these results, the Board of Directors of the Bank have declared a second interim dividend of Rs 1.50 per share, which will be paid by the end of November. Earlier this year, the Bank declared a dividend of Rs 1.50 per share.

According to Ranjith Samaranayake, Commercial Bank’s Senior Deputy General Manager – Finance and Planning, profit growth was facilitated by an increase of Rs 3.10 billion or 57.24 per cent in the Group’s net interest income from Rs 5.42 billion to Rs 8.53 billion in the period under review. This was achieved with better management of interest margins in volatile market conditions, and adequate balance sheet growth in this period, he said.

Total assets of the Group rose to Rs 258.7 billion as at 30th September 2007, a growth of Rs 34.7 billion or 15.5 per cent over the figure of Rs 223.9 billion at 31st December 2006.

This substantial growth was made possible by total deposits of the Group growing by Rs 16.9 billion (10.7 per cent) in the first nine months of the year and a rights issue which raised an additional Rs 5.7 billion.

Total advances of the Group rose from Rs 148.8 billion as at 31st December 2006 to Rs 163.7 billion at the end of September 2007, an increase of Rs 14.9 billion or 9.98 per cent.

Mr. Samaranayake disclosed that apart from net interest income, profit growth was boosted by exchange income which rose from Rs 935.9 million to Rs 1.342 billion at the end of the third quarter, reflecting a healthy increase of Rs 406.6 million or 43.44 per cent. This was mainly due to higher translation gains as a result of the depreciation of the Sri Lankan Rupee against the US Dollar by 9.31 per cent in the year to September 30, 2007, he explained.

Meanwhile, Other Income of the Group for the period reviewed at Rs 2.01 billion, recorded a decrease of Rs 183.3 million or 8.33 per cent over the corresponding nine months of 2006, chiefly due to the previous year’s figures being inflated by capital gains of Rs 178.3 million and mark to market gains of Rs 211.1 million on account of investments in DFCC Bank shares held by the Bank.

“Discounting the effect of these exceptional gains, the Other Income of the Group increased by Rs 206 million or 11.38 per cent, which was a satisfactory growth,” Mr. Samaranayake said.Non-interest expenses of the Group increased by Rs 801.7 million or 22 per cent in the review period.

A general provision of Rs 377 million made in the current year in keeping with the new general provisioning requirements imposed by the Central Bank with effect from the last quarter of 2006 resulted in net loan loss provisions rising by Rs 810 million to Rs 1.01 billion, an increase of nearly 400 per cent.

Taken separately, the Commercial Bank, the largest entity in the Group, reported pre-tax profit of Rs 5.25 billion for the nine months ending September 30, 2007, an increase of Rs 1.3 billion or 34.97 per cent. Profit after tax for the same period grew 42.46 per cent to Rs 3.2 billion.