DFCC quarterly profits up

The DFCC group’s non-audited group post-tax profits for the three months to June 30, 2007 rose marginally to Rs 425 million from Rs 391 million from the April-June 2006 period. Gross interest income on loans and advances of Rs 1755 million in the current period was 49 percent higher than the Rs 1,179 million achieved in the previous period.

The bank said it resorted to a significantly higher level of short-term wholesale customer deposits towards the end of the previous financial year and during the current quarter to meet the increased credit demand and also to fund its investment of Rs 1,603 million in a rights issue.

Customer Deposits recorded a year on year growth of Rs 7,217 million. The statement said the prevailing interest rate and market liquidity volatility enabled institutional wholesale depositors to command very high short term deposit interest rates. All of these factors disproportionately increased the bank’s cost of funds during the reporting period.

Non-performing loans and advances as a percentage of the total loans and advances were 7.2 percent. The portfolio infection rate in leases during this quarter was significantly higher. Some of the affected leases were sector specific (eg. transportation, tourism) probably associated with increases in fuel and operating costs reducing the debt service capacity of the lessees.