Business
ComBank Loan book up by Rs 121 bn in 9 months, with 44% growth coming in Q3
The Commercial Bank of Ceylon Group has achieved impressive growth at the end of the third quarter of 2024 by banking on judicious portfolio management and continued improvement of its CASA ratio to counteract the impacts of reduced interest income in prevailing market conditions.
Comprising of Sri Lanka’s biggest private sector bank, its subsidiaries and an associate, the Commercial Bank Group has reported net interest income of Rs 88.98 billion for the nine months ended 30th September 2024, an increase of 46.15%, despite declines in interest income and gross income for the period.
With interest rates for customer advances as well as government securities continuing to be lower than in the preceding year, the Group posted gross income of Rs 241.71 billion for the period, down 5.57% over the corresponding nine months of 2023.
Interest income was similarly impacted, reducing by 7.77% to Rs 207.12 billion, but repricing of deposits and a further improvement in the CASA ratio brought interest expenses down by a noteworthy 27.83% to Rs 118.14 billion, enabling healthy growth in net interest income, the Group said in a filing with the Colombo Stock Exchange (CSE).
“The challenge for banks operating in periods of low interest rates is to grow their portfolios while managing margins with timely adjustments,” Commercial Bank Chairman Sharhan Muhseen commented. “Our impeccable record of prudence and fairness along with our demonstrated financial strength continues to drive deposit mobilisation, enabling us to continue to step up lending. The performance for the nine months reviewed flows from these dynamics, underscoring the Group’s expertise and resilience.”
Commercial Bank Managing Director/CEO Sanath Manatunge added that vigilant supervision of the quality of the loans portfolio, equitable and forward-looking management of impairment provisioning and timely repricing of assets and liabilities have underpinned the Group’s nine-month performance and would continue to be the strategy for the future. “Strong, consistent performance even in volatile conditions enables the Bank to continue to accelerate lending, and invest in digital transformation, sustainability and other commitments,” he said.
For the nine months reviewed, the Group reported gross loans and advances of Rs 1.42 trillion, a growth of Rs 121.06 billion or 9.34% since December 2023, at a monthly average of Rs 13.45 billion. Significantly, 44.20% of loan book growth was recorded in the third quarter of the year. Loan book growth over the preceding 12 months was Rs 177.88 billion or 14.36%, averaging Rs 14.82 billion per month.
Deposits increased by 3.66% to Rs 2.23 trillion in the nine months, despite the appreciation of Rupee against the Dollar, reflecting average monthly growth of Rs 8.73 billion, and YoY growth of 9.22%, with monthly average growth of Rs 15.67 billion over the preceding 12 months. Notably, while Rupee deposits grew by more than Rs 120 billion in the review period, the Rupee value of foreign currency deposits reduced by Rs 46.19 billion, due to the appreciation of the Rupee.
Total assets of the Group increased by Rs 108 billion or 4.05% in the nine months to reach Rs 2.76 trillion as at 30th September 2024.
Total operating income of the Group improved by 33.86% to Rs 115.72 billion in the period reviewed. The Group made provisions of Rs 20.02 billion for impairment charges and other losses, a reduction of 22.35% over the figure of Rs 25.78 billion for the corresponding nine months of 2023, which included a provision of Rs 12.57 billion for the third quarter alone. In contrast, impairment charges for the third quarter of 2024 were just Rs 1 billion.
Net operating income for the nine months grew by 57.74% to Rs 95.70 billion. The Group’s success in containing total operating expenses for the period to Rs 36.49 billion – a growth of only 14.12%, enabled it to report operating profit before taxes on financial services of Rs 59.21 billion, an improvement of 106.36%.
Taxes on financial services increased by 141.95% to Rs 8.87 billion, resulting in profit before tax of Rs 50.34 billion for the nine months, an improvement of 101.14%. Income tax for the nine months increased by 83.13% to Rs 18.80 billion, leading to a net profit of Rs 31.54 billion for the first nine months of 2024, representing a growth of 113.61% over the corresponding period of 2023.
Total tax charges of the Group at the end of the third quarter amounted to Rs 27.67 billion, double the Rs 13.93 billion tax charge in respect of the first nine months of the preceding year.
Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs 48.73 billion and profit after tax of Rs 30.38 billion for the nine months reviewed, recording growths of 112.70% and 128.33%, respectively.
Business
Inflation curbed by govt. fuel subsidy introduction and surcharge on vehicle import tax – CBSL Governor
By Hiran H. Senewiratne
The government’s decision to introduce the fuel subsidy and the surcharge on the vehicle import tax helped curb inflation to a great extent, Central Bank Governor Dr. Nandalal Weerasinghe said.
‘The government this week approved a Rs. 40 billion fuel subsidy for the next three months on top of Rs. 57 billion provided from April-June, Governor Weerasinghe told the media yesterday at the Central Bank head office in Colombo at the CBSL’s monthly monetary policy review meeting.
‘If not for fuel subsidy and surcharge on the vehicle import tax, the inflation would have been higher than the current level, the Governor said.
‘There could have been higher imports and reserve building up would have been difficult. Inflation has risen beyond the Central Bank’s upper band of 7 percent since July, he said.
‘The country’s inflation hit a 37-month high of 8 percent in August after the government raised fuel prices more than 50 percent following the Middle Eastern escalation by end February, Dr Weerasinghe said.
The Central Bank’s inflation target for the past three years have been 5 percent with lower band of 3 percent and higher band of 7 percent, Governor said.
The Governor added: ‘The government provided Rs.57 billion as a fuel subsidy mainly for diesel. The latest Rs.41 billion has been allocated only for diesel as it is used for public transport.
‘The government also imposed a temporary 50 percent surcharge on Customs Import Duty on new personal vehicles on May 16 and has extended it until December 31, a move that will help to prevent outflow of foreign currency.
‘The Central Bank also tightened the monetary policy in May, raising the key monetary policy rate by 100 basis points, to curb excess demand in the economy to control demand-driven inflation.’
Meanwhile, head of the CBSL’s Economic Research Department L.R.C. Pathberiya said, ‘Credit growth has slowed to 24.5 percent year on year in August from a higher level of 30 percent a few months ago, after the Central Bank’s monetary policy tightening in May.
‘However, the Central Bank is optimistic about the current credit growth, he explained.
Pathberiya added: ‘The credit to the private sector from commercial banks has slowed, but we believe it is sufficient for economic growth.
‘The nation’s economic growth slowed to 4.2 percent year-on-year, its lowest in 11 quarters’’.
Business
PM warns Sri Lanka’s waste crisis is a ‘disaster waiting to happen’
By Ifham Nizam
Prime Minister Dr. Harini Amarasuriya warned that Sri Lanka’s worsening waste-management crisis, particularly the uncontrolled accumulation of plastic waste and poorly managed landfills, was a “disaster waiting to happen”, urging scientists, researchers and policymakers to help the government find practical solutions before the problem reaches a critical point.
Addressing the launching of the Open University of Sri Lanka organized, ‘International Conference on Plastics, Innovations and Environmental Sustainability’ (ICPIES 2026) as Chief Guest, at the Cinnamon Lakeside Hotel yesterday she said waste management, waste reduction and recycling had become national priorities, with the government placing greater emphasis on the issue in its preparations for the 2027 Budget.
‘This is becoming a critical issue and something that, at any moment, if we don’t manage it properly, could become a huge disaster. It’s a disaster waiting to happen, Dr. Amarasuriya said.
She said unregulated and poorly managed landfills, particularly in and around Colombo, posed serious environmental and public risks, while increasing urbanisation was extending the waste-management challenge beyond the capital to other parts of the country.
‘As a member of Parliament for the Colombo District, I can tell you that one of the biggest challenges we are facing is waste management and actually managing the recycling of waste, and particularly of plastic products. This is something that we are battling every day, she said.
The Prime Minister said the government could not regard economic development as meaningful if it came at the expense of the country’s environment and natural resources.
‘If we are to speak of a beautiful life, we must first ensure that the air we breathe, the water we drink, the soil on which we live, the food we eat is clean and secure, she said.
She pointed to the scale of the global plastics crisis, noting that around 400 million tonnes of plastic waste are generated worldwide each year, while between 19 and 23 million metric tonnes of plastic waste enter natural ecosystems annually.
Plastic waste eventually breaks down into microplastics, which can enter aquatic organisms and subsequently the human food chain, she said.
Dr. Amarasuriya also linked plastic consumption and environmental degradation to the wider climate crisis, warning that the consequences of climate change were already being experienced by communities around the world.
She referred to devastating floods and landslides in the Himalayan region and said the impacts of climate change demonstrated that environmental damage could have consequences far beyond national boundaries.
Coastal clean-up projects and other waste-separation and recycling initiatives are also being implemented, while the government is working with the Western Provincial Council on a refuse-derived fuel project at Karadiyana.
The third ICPIES, held under the theme “Eco-Driven Innovations,” brings together researchers, policymakers, industry representatives and other stakeholders to examine plastic pollution, microplastics, circular-economy approaches, waste-management policy, technological innovation, artificial intelligence and smart environmental monitoring. The conference ends today.
Senior Professor P. M. C. Thilakarathne, Vice Chancellor of the Open University of Sri Lanka, was the Guest of Honour.
Business
Mention of possible future inflation dampens investor appetite
By Hiran H. Senewiratne
Stock investors were worried yesterday following Central Bank Governor Dr. Nandalal Weerasinghe’s mention at the CBSL monthly monetary policy review meet of possible future inflation pressures that may impact the economy.
The All Share Price Index went down by 4.89 points, while the S and P SL20 rose by 16.1 points. Turnover stood at Rs 1.55 billion with four crossings.
Those crossings were; Access Engineering crossed 1.5 million shares to the tune of Rs 119.8 million; its shares traded at Rs 79.60, Sampath Bank 450,000 shares crossed tfor Rs 63 million; its shares sold at Rs 140, Sunshine Holdings 750,000 shares crossed to the tune of Rs 21.4 million; its shares traded at Rs 28.50 and Softlogic Life 290,000 shares crossed for Rs 20.4 million; its shares sold at Rs 70.40.
In the retail market companies that mainly contributed to the turnover were: Access Engineering Rs 150 million (1.9 million shares traded), JKH Rs 113 million (six million shares traded), Softlogic Life Rs 80 million (one million shares traded), Softlogic Capital Rs 64.7 million (6.7 million shares traded), Lanka Realty Rs 64.3 million (1.3 million shares traded), Colombo Dockyard Rs 53.7 million (452,000 shares traded) and Sierra Cables Rs 50 million (1.43 million shares traded). During the day 58.9 million share volumes changed hands in 13536 transactions.
It is said that mixed market reactions were noted especially in manufacturing while banking, insurance and FMCG sectors performed well. Further, construction sector counters, especially Access Engineering, and banking sector counters, especially Sampath Bank, performed well.
People’s Leasing & Finance PLC announced its allotment basis for 100 million listed debentures it issued to raise Rs 10 billion, after receiving applications for the full amount.
Yesterday the rupee was quoted at Rs 330.68/75 to the US dollar in the spot market from Rs 330.70/90 the previous day, while bond yields were quoted steady to lower, dealers said.
An auction of Rs 80,000 million Treasury bills was ongoing.
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