ComBank deposits surpass landmark Rs 1 trillion in Q1 2019
View(s):The Commercial Bank Group comprising the Commercial Bank of Ceylon PLC, its subsidiaries and associates, has reported gross income of Rs. 35.501 billion for the three months ended March 2019, an improvement of 12.86 per cent over the first quarter of 2018.
Operating profit before impairment charges for the period represented an increase of 4.86 per cent over the corresponding period of 2018. However, operating profit before taxes on financial services at Rs.6.804 billion reflected a negative growth of 5.11 per cent, largely driven by an increase in impairment charges owing to rising non-performing loans and early recognition of impairment provisions as required by the expected credit loss method under SLFRS 9.
“The higher impairment charges necessitated by the slowdown in key sectors of the economy, lower exchange profits resulting from translation losses on foreign exchange, and substantially higher taxation in the three months reviewed negatively impacted profits despite sound operational results reported by the group,” the bank said in a media release.
The group posted profit before income tax of Rs.5.019 billion and profit after income tax of Rs.3.191 billion in the first quarter of 2019 in a performance that reflects the impact of these external factors.
“Further, an increase in the taxes on financial services primarily due to the introduction of Debt Repayment Levy (DRL) from October 2018, which cost the bank Rs.576.450 million, contributed to a decline in the pre-tax profit of the group,” it said.
Income tax charge for the three months under review amounted to Rs.1.828 billion, reflecting an effective tax rate of 36.42 per cent as opposed to 29.79 per cent in the first quarter of 2018. Profit after tax for the group reduced by 22.90 per cent to Rs. 3.191 billion and by 27.23 per cent to Rs. 3.023 billion at bank level.
Commenting on the bank’s performance, the Commercial Bank Chairman Dharma Dheerasinghe said the rate of taxation on banks continues to be a matter of concern, particularly in the context of the challenging external conditions affecting the industry”.
Its Managing Director/CEO S. Renganathan explained that the bank has followed a more cautious approach in expanding its advances portfolio during these challenging economic conditions, which has contributed to a marginal decline in the loan book in comparison to 31st December 2018.
Deposits grew by Rs.31.214 billion or 3.14 per cent since December 2018, to Rs. 1.026 Trillion as at 31st March 2019.