Cargills Bank reported a profit after tax of Rs.106 million for 1Q2023, vs a loss of Rs.58 million in 1Q2022. The results were driven by strong progress in its core business and lower impairment charges during the quarter, the bank said in a media release.
Net Interest Income rose 52 per cent YoY to Rs.863 million, driven by the high interest rate environment prevalent during the quarter and expansion of the bank’s Total Assets by 11 per cent QoQ to Rs.60 billion, with Loans & Advances increasing 8 per cent QoQ.
The bank reported impairment charges of Rs.278 million in 1Q2023, down 32 per cent YoY. Nevertheless, managing credit quality remains a challenge as the weak economic environment continues to impact customers’ ability to meet their scheduled payments.
The bank reported an Operating Profit before taxes of Rs.259 million, a sharp improvement from the loss before taxes of Rs.31 million reported in the corresponding quarter. Profit after tax, at Rs.106 million, was impacted by higher taxes on account of both VAT on financial services and corporate income tax.
Senarath Bandara, Managing Director/CEO of Cargills Bank commenting on the performance of the bank stated, “We are pleased to carry the positive earnings trend into 2023 in what continues to remain a challenging near-term environment. Our focus has been to manage portfolio quality and the narrowing interest spreads while selectively growing our portfolio to maintain the positive earnings trajectory.”
The gradual improvement in economic indicators and ongoing negotiations with the IMF augur well for a recovery of the Sri Lankan economy, which should alleviate the portfolio quality stress faced by the sector and provide renewed growth opportunities in the medium term.