Healthy profits from ComBank but impairment costs high
View(s):The Commercial Bank of Ceylon Group which has posted a strong operational performance in the first nine months of the current financial year, says the biggest impact on growth is provision for impairment (delayed loan repayments).
Noting that the external challenges that have depressed profit and other indicators continued in the third quarter, Commercial Bank Chairman Prof. Ananda Jayawardane said: “The growth we have recorded in business volumes indicates that core banking operations remained intact.
The single biggest impact on growth in terms of bottom line continues to be the burgeoning provisioning for impairment, which is an unavoidable response to the prevailing economic environment. Such provisioning assures our stakeholders that the bank is financially prepared for any future contingencies.”
Impairments costs have tripled for the nine months ended 30th September 2022 and reduced profits for the quarter as well as the year to date compared to the corresponding periods of last year, the bank said in a statement. Impairment charges and provisions for other losses for the nine months amounted to Rs. 52.272 billion, reflecting an increase of Rs. 34.274 billion or 190.44 per cent from Rs. 17.997 billion recorded for the corresponding nine months of 2021.
These achievements were recorded even after providing relief for affected businesses and individuals in line with directions issued by the Central Bank as well as the bank’s own relief schemes which included deferment of repayment terms of credit facilities, concessionary rates of interest on eligible loan products (debt moratorium) and waiving off certain fees and charges following the global pandemic.
Comprising of the Commercial Bank of Ceylon PLC, its subsidiaries and an associate, the group reported gross income of Rs. 195.573 billion for the first nine months of 2022 and Rs. 76.056 billion for the third quarter, reflecting strong growth rates of 62.91 per cent and 89.58 per cent respectively in topline.
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