The Bank of Ceylon’s (BOC) profitability for the 2009 financial year came under pressure, in part due to the downward revision of interest rates which resulted in a net profit decline of 13.4% to Rs.3.1 billion for the period under review from a net profit of Rs.3.56 billion in 2008. In a press release issued this week, the BOC stated that revising interest rates is a duty as bankers to the nation. It said that despite the decline in profit, total assets increased by 11.1% to reach the half trillion rupee mark at Rs.538.2 billion.
In spite of the downward revision in interest rates, the BOC stated that interest income increased by 6.8% in 2009 over the previous year while net fee income grew by 6.7%. Net gains from investment activities recorded an increase of 237.6% to Rs.1,961.1 million. The bank further stated that the relatively stable US dollar against the Rupee during the year prevented avenues for the bank to earn mark-to-market gain, impacting the year's foreign exchange gains which decreased by 45.7% compared to 2008. ‘Given our dominance in the foreign currency market, our profit from such sources forms a significant element in our income,’ the bank said.
Net operating income for the year under review increased to Rs.23.1 billion, up by 5.5% from 2008.
Customer deposits increased by 29.3% to Rs.408.6 billion in 2009 and gross lending to the private sector increased by 3% to Rs.183 billion, notwithstanding the downward trend in lending in the banking. The BOC said its loan portfolio continues to be well diversified into good quality industries.
Non performing loans (NPL) as a proportion of gross loans have increased to 5.65% in 2009 from 4.92% in 2008. The press release stated that the total NPL’s increased by 12.4% to Rs.15.5 billion in 2009 from Rs.13.8 billion the previous year. |
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