Sri Lanka’s biggest bank reports 43% growth in net 2016 profit
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BoC Chairman Ronald C Perera
Bank of Ceylon (BoC) has reported a record-breaking pre-tax profit of Rs.31.2 billion for the year ending December 31, 2016, while post-tax profit stood at Rs.24.8 billion. The profit for 2016 at Sri Lanka’s biggest bank is a sharp 43 per cent rise from 2015.
Total operating expenses increased by 7 per cent in line with the business expansion. However depicting the BoC’s effective cost benefit management,cost to income ratio came down to 43 per cent from 45 per cent compared to the previous year, the premier bank said in a media release on Monday.
Net operating income for the period reflected an improvement of 16 per cent mainly backed by the increase of 17 per cent in net interest income and 59 per cent increase in other operating income.
Reduction of 26 per cent in total impairment charges through a reversal in provision following improved Non Performing Loans (NPLs) has also complemented the increase in net operating income. In 2016 many policy rates were changed affecting the market interest rate to move upward. In January
2016 Statutory Reserve Ratio (SRR) was increased by 150 bps to 7.5 per cent and Standing Lending Facility Ratio (SLFR) and Standing Deposit Facility Ratio (SDFR) also increased during the year up to 8.5 per cent and 7.0 per cent.
“Whilst, the increasing trend in market interest rates has resulted in an increase in both interest income and expenses, the BoC has managed to maintain its interest margin at the previous year level of 3.3 per cent through its effective management of cost of funding. Interest income earned through investment activities particularly in Sri Lanka Development Bonds and Treasury Bonds also contributed towards the growth in the net interest income,” the release added.
“Despite the decline in net fee and commission income by 8 per cent compared to the previous year in the light of subdued performance experienced across the export industry, 59 per cent impressive growth in other operating income showcased the BoC’s ability of making its targets a reality through various avenues among challenges. This operating income includes Rs.3.1 billion capital gain from disposal of investment too,” it added.
The bank reported Rs.1 trillion in loans and advances base, with total assets reaching Rs.1.7 trillion as of end 2016 .
The deposit base accounted for 80 per cent of the BoC’s liabilities as at end 2016 and grew by 16 percent to Rs.1.3 trillion from end December 2015.