BOC navigates challenging period with smooth 1H2024 performance
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Bank of Ceylon, in the first half of 2024, has successfully navigated the challenging landscape of the Sri Lankan economy, reporting a Profit Before Tax (PBT) of Rs.22.4 billion during this period, sharply up by 114 per cent compared to the previous year’s period PBT of Rs.10.5 billion.In a media release, Bank of Ceylon Chairman, Kavan Ratnayaka said: “The Bank of Ceylon continues to foster progress and innovation. Further initiatives are focused on supporting youth financing, empowering women entrepreneurs, and nurturing start-ups. Special attention is given to advancing green finance and supporting sustainable development goals, ensuring that growth contributes to environmental sustainability and well-being of society.”
The bank’s net income, demonstrating its ability to reprice its assets and liabilities in line with market conditions, rose significantly to Rs.57.5 billion, marking a 101 per cent increase compared to Rs.28.6 billion in the same period of 2023. This growth underscored the bank’s improved profitability despite the challenging economic environment.
The bank took a cautious approach to credit risk management, mindful of the ongoing uncertainties in both global and local economies. To address heightened risks in certain industries, the bank implemented management overlays, allowing for close monitoring and proactive risk mitigation, and this strategy helped the bank to anticipate potential issues early and set aside adequate provisions for possible credit losses.
Impairment charges amounted to Rs.3.3 billion for loans and advances and Rs.4.6 billion for other financial assets, reflecting challenges faced by sectors still recovering from economic downturns and
global disruptions.
However, the impaired loans (Stage 3) ratio increased to 5.68 per cent, indicating potential external economic pressures. Nonetheless, the impairment coverage ratio (Stage 3 impairment provision to Stage 3 Loans) remains strong at 58.85 per cent, demonstrating the bank’s prudent risk management.
The bank reported total operating income of Rs.68.7 billion, reflecting significant growth of 163 per cent compared to the previous year, with this increase being driven by substantial improvements in net interest income, net fee and commission income and trading income.
The bank’s operating profit before taxes on financial services reached Rs.30.1 billion, a sharp 101 per cent improvement over the previous year.
In the outlook for the rest of the year, General Manager /CEO Russel Fonseka said, “Looking ahead, the bank remains committed to enhancing digital banking solutions and expanding service offerings. The strategic vision is centered on sustainable growth and reinforcing leadership in the banking sector.”
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