Monday, May 17, 2010

commercial Bank makes solid start - Makes Rs 1,107 million profit in Q1 2010:

A strong focus on fundamentals has enabled the Commercial Bank Group to post strong profit growth in the first quarter of 2010 while curtailing growth of its non-performing loans portfolio.

In results released to the Colombo Stock Exchange, the Group comprising Commercial Bank PLC, its subsidiaries and associates reported pre-tax profit of Rs 1,904.9 million for the three months ending March 31, 2010, an increase of 16.47 per cent over the corresponding quarter of last year.

Commercial Bank head office
The Group's profit after tax, at Rs 1,107.9 million reflected a growth of 24.18 per cent.

Elaborating on the key aspects of this performance, Commercial Bank's Chief Financial Officer Nandika Buddhipala said steps taken to control the growth of non-performing loans, combined with a decline in interest expenses at a higher rate than the decline in interest income had resulted in an improvement of interest margins in the period reviewed.

Although interest income for the quarter had declined 8.71 per cent to Rs 8,366.9 million, interest expenses declined by a higher percentage of 22.99 per cent to Rs 4,793.1 million thereby enabling the Group to grow net interest income by 21.49 per cent to Rs 3,573.8 million, he disclosed.

Another significant contributor to growth was the Group's reduction in Specific Provisions and a significant improvement in recoveries during the quarter under review.
There was a near 60 per cent improvement of recoveries during the quarter compared to the corresponding quarter of last year, a reduction of Specific Provisions from Rs 460.4 million to Rs 163.6 million and a reversal of Rs 72.6 million in General Provisions.

These gains were partly offset by a 26.09 per cent decline in non-interest income, largely due to exchange income reducing from Rs 983.6 million in the first quarter of last year to Rs 446.3 million in the quarter under review. Other income improved 13.16 per cent to Rs 809.4 million.

Total deposits of the Group rose from Rs 234.7 billion as at December 31 2009 to Rs 241.3 billion at March 31 2010, an increase of Rs 6.6 billion over three months.
Total gross loans and advances grew by Rs 716.1 million in the same period, from Rs 182.7 billion to Rs 183.4 billion.

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