ComBank Group ends tough 2021 with solid growth

The Commercial Bank Group ended 2021 with gross income of Rs. 163.675 billion, an improvement of 7.70 per cent, with interest income accounting for more than 80 per cent of the top line in a year of mixed fortunes.

The group, comprising the Commercial Bank of Ceylon PLC – Sri Lanka’s largest private sector bank – its subsidiaries and the associate, reported interest income of Rs. 132.818 billion for the year ended 31^st December 2021, reflecting a growth of 7.04 per cent. With interest expenses for the year reducing by 9.31 per cent to Rs. 66.402 billion, the group achieved net interest income of Rs. 66.416 billion, an increase of 30.56 per cent, it said in a media release.

The final quarter of the year saw interest income growing by 17.84 per cent to Rs. 36.592 billion and accounting for more than 83 per cent of the group’s three-month gross income of Rs. 43.625 billion, which was up 13.76 per cent over the fourth quarter of 2020. This was despite interest expenses increasing by 4.30 per cent to Rs. 17.709 billion in the final quarter due to an increase in interest rates.

Total operating income for the year under review grew by 21.98 per cent to Rs. 93.598 billion, and the group’s impairment charges and other losses increased by 17.37 per cent to Rs. 25.140 billion, the statement said.

Net operating income for the full year improved by a healthy 23.77 per cent to Rs. 68.458 billion, but grew by a comparatively lower rate of 7.89 per cent to Rs. 17.504 billion due to the higher impairment charges provided in the fourth quarter, the bank said. Total operating expenses increased by 12.93 per cent to Rs. 29.658 billion consequent to an increase in personnel expenses following the signing of a Collective Agreement effective January 2021, while general cost increases resulted in other operating expenses for the year growing by 18.01 per cent to Rs. 9.638 billion.

Operating profit before VAT on Financial Services grew by a noteworthy 33.58 per cent to Rs. 38.801 billion and the Group’s VAT on Financial Services for the year increased by 28.99 per cent to Rs. 5.845 billion, while profit before income tax for the year improved by 34.41 per cent to Rs. 32.957 billion. With income tax charges increasing at a relatively lower rate of 16.60 per cent to Rs. 8.667 billion due to the reduction in the income tax rate, the group posted a profit after tax of Rs. 24.290 billion for the year, achieving a growth of 42.16 per cent before providing for the proposed Surcharge Tax, which had not been enacted in Parliament at the time of reporting. It has therefore not been provided for in the year reviewed.

Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs. 32.001 billion for the year under review, achieving a robust growth of 36.11 per cent and profit after tax of Rs. 23.606 billion, recording an improvement of 44.17 per cent.

Commenting on these results, Commercial Bank Chairman Justice K. Sripavan said: “The performance of the Group can be described as exceptional when the external challenges of the year are factored in. Our focus on the core mission and the needs of the hour resulted in emphasis being placed on enhancing customer experience, and we are proud of the ways in which our teams served with utmost dedication, putting our customers first as they have done for the past 101 years.”

Commercial Bank Managing Director and Group CEO S. Renganathan pointed out that the bank was able to improve on its key performance ratios in 2021, to become even more financially stable and better-positioned to continue its mission as a systemically important bank. “In the face of uncertainty, we continued to build on our last year’s momentum and relief programmes, emerging as the leading lender for COVID-19 relief among private sector banks in Sri Lanka,” he said. “We have continued to demonstrate remarkable operating resiliency throughout the pandemic through customer focus, digital engagement and operational excellence.”