Depreciating rupee results in exchange profit gains for ComBank
View(s):Commercial Bank, like many other banks, has seen solid gains in foreign exchange profits due to the depreciation of the Sri Lanka rupee.
Reporting its latest 6-months-ending June 2018 results, the premier Sri Lanka bank said that “other income, including net gains from trading and on financial instruments, exchange profit and recoveries, grew by a noteworthy 31.89 per cent to Rs. 2.117 billion, helped by a substantial increase in exchange profit due to the depreciation of the Sri Lanka Rupee against several major currencies which cushioned the loss on trading reported as a result of SWAP losses”.
The rupee is now trading at Rs. 159-160 per dollar. In a media release, Commercial Bank said it continued its growth momentum into the second quarter of 2018, despite having to pay in excess of Rs. 7 billion in taxes and being compelled to make significant provisions for impairment charges for the six months ending June 30.
The bank posted profit before VAT and NBT of Rs. 15.647 billion for the period, reflecting growth of 23.33 per cent over the corresponding six months of last year.
Profit before tax grew 23.73 per cent to Rs. 12.898 billion although VAT and NBT rose to Rs. 2.749 billion for the six months under review.
Gross income for the period was up 19.30 per cent to Rs. 65.992 billion, with interest income growing by a healthy 18.89 per cent to Rs. 58.207 billion on the back of robust loan book growth.
Income tax grew sharply by 47.38 per cent to Rs. 4.252 billion for the six months, primarily due to the removal of most income tax exemptions enjoyed by the banking industry with the introduction of the new Inland Revenue Act.
Post-tax profit grew by 14.67 per cent to Rs. 8.646 billion for the first half of the year, an increase of Rs. 1.106 billion.
Commenting on these results, Commercial Bank Chairman Dharma Dheerasinghe said the bank’s performance reflected its ability to withstand challenges, such as an industry-wide increase in impairment charges, necessitated by the trend of an escalation in non-performing loans (NPLs).
Managing Director/CEO S. Renganathan said: “the bank had achieved a CASA ratio of 39.31%, one of the best in the industry. We are also contributing substantially to the state.”
The bank’s deposits increased to Rs. 911.180 billion in the period reviewed, growing by 7.18 per cent or Rs. 61.053 billion since 31st December 2017, reflecting average monthly improvements of more than Rs. 10 billion.