Monday, February 15, 2010


DFCC Bank’s own non-audited Profit After Tax (PAT) for the nine months ended December 31, 2009 (current period) was Rs. 1,327 million an increase of 13.8 percent over the comparable period (April to December 2008).

A combination of portfolio reduction due to continued low demand for project loans and the sharp drop in market lending rates during the third quarter resulted in the reduction in the interest margin and net interest income from lending activities. However, the Bank was able to contain costs (non-interest expenses) at below the comparable period, said DFCC Bank CEO Nihal Fonseka in a statement.

The portfolio contraction resulted in the release of part of the mandatory general provision previously made, which is one percent of the portfolio on which specific provisions are not made.

The cumulative reduction of this mandatory general provision in the current period was Rs. 57 million. However, in the second quarter the general provision on the finance leases portfolio was increased to 3 percent from 1 percent on June 30, 2009, recognizing impairment losses of this portfolio over and above the specific provision. This additional general provision during the current period was Rs. 72 million and the net amount charged to the income statement was Rs. 15 million.

Gross specific provisions increased from Rs. 365 million in the comparable period to Rs. 489 million in the current period which was considerably reduced by recoveries of previously provided loans and advances which increased to Rs. 377 million from Rs. 261 million in the previous period.

The bank swapped US dollars 15 million sourced from an overseas medium term borrowing to Rupees with the exchange risk covered.

The premium payable on the forward exchange purchase contract gave rise to an exchange loss but was more than compensated by the higher interest income earned on the Rupees generated. 

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