The Commercial Banks, like many banks struggling with loan repayments by affected borrowers, has reported a near 16 per cent drop in group pre-tax profit to Rs.13.376 billion for the six months ending June 2022 against the first half of 2021.
Income tax for the period rose by 23.47 per cent to Rs.4.198 billion despite the drop in pre-tax profit for the period under review as the figure for the corresponding six months of 2021 was reduced by the reversal of an over-provision for 2020 resulting from the reduction in the corporate tax rate from 28 per cent to 24 per cent, which was adjusted in the first quarter of 2021. After tax profit of Rs. 9.178 billion for the six months reflected a decline of 25.71 per cent compared to the corresponding period of last year, the bank said in a media release.
It said high impairment provisions neutralised the 6-month operational growth of the ComBank Group.
“… the six-month financial performance mirrors the impacts of the country’s macro-economic variables, with solid operational gains negated by extraordinary provisioning in the second quarter for impairment charges and other losses,” it said.
The group reported impairment charges and other losses totaling to Rs. 35.219 billion for the six months and Rs. 29.258 billion for the second quarter alone, reflecting increases of 157.93 per cent and 350.24 per cent respectively.
The group posted a gross income of Rs. 119.517 billion for the six months ended 30th June 2022 and Rs. 64.944 billion for the second quarter, achieving a healthy topline growth of 49.52 per cent and 66.41 per cent respectively.
With rising interest rates and the consequent repricing of deposits, interest expenses increased by 47.23 per cent to Rs. 47.404 billion for the six months, and by 77.61 per cent to Rs. 28.380 billion for the second quarter.
Commenting on the period reviewed, Commercial Bank Chairman Prof. Ananda Jayawardane said: “Our six-month results are a case study on how macro-economic challenges can neutralise solid operational performance. We have achieved encouraging operational performance across the board, but have been compelled, as any prudent institution would do, to make adjustments that respond to the deteriorating economic environment, ensuring that the bank meets its obligations to all stakeholders and retains its inherent financial strength and stability.”
The bank’s Managing Director and CEO Sanath Manatunge added: “The mercurial policy environment we operate in, requires agile responses as well as forward-looking decisions, however tough they may be. Our second quarter results are particularly influenced by additional impairment charges that impacted on profit growth, but represent a realistic management of credit risk.”
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