Sri Lanka Com Bank June net up 7.5-pct

Aug 02, 2010 (LBO) - Sri Lanka's Commercial Bank net profit for the June 2010 quarter rose 7.5 percent to 1.2 billion rupees from a year ago with a sharp fall in interest expenses, a stock exchange filing said.

Total income was down 10 percent to 9.9 billion rupees in the quarter, the bank said.

Interest income fell 6.4 percent to 8.4 billion rupees while interest expenses fell at a sharper 25 percent to 4.6 billion rupees, allowing net interest income to rise 34 percent to 3.8 billion rupees.

Commercial Bank said fee income fell, dragged down large by a sharp fall in foreign exchange income, which halved to 439 million rupees in the June 2010 quarter from the previous year.

Basic earnings per share rose 6.7 percent to 3.20 rupees.

Commercial Bank said provision for bad loans rose 67 percent to 105 million rupees in the June 2010 quarter.

Total performing loans and advances were 167 billion rupees as at June 30, 2010, up 1.62 percent from the beginning of the year.

Total deposits rose 3.20 percent to 242 billion rupees.

At bank level, the interest margin improved to 4.53 percent as at June 30, 2010 from 4.11 percent at the beginning of the year.

Return on assets before tax rose to 2.46 percent from 2.38 percent over the same period and return on equity rose to 15.98 percent from 15.83 percent.

A bank statement said continued improvements in key performance indicators in the second quarter of 2010 enabled Commercial Bank Group to record "noteworthy profit growth" for the six months ended 30th June, despite a drop in foreign exchange income.

"Among the principal contributors to this growth was a 27.74 percent growth in net interest income attributed to efficient management of interest expenses, which reduced by 24.13 percent in the period under review, during which period interest income too declined by 7.57 percent."

The statement quoted Commercial Bank’s Chief Financial Officer Nandika Buddhipala as saying the re-pricing of interest-sensitive assets and liabilities had contributed to an improvement in interest margins to 4.53 percent.

"The positive effects of an improved net interest margin and a substantially lower requirement for specific provisions for bad and doubtful debts was dampened somewhat by a 53.79 percent drop in foreign exchange income" in the six-month period.

"This was largely due to translation losses consequent to the appreciation of the Sri Lanka rupee against the US dollar and a drop in the volume of foreign exchange transactions," the statement said.

source - www.lbo.lk