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ComBank notches 3rd Rs 1 trillion mark in Balance Sheet in dynamic Q2

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Commercial Bank’s Chairman Justice K. Sripavan (left) and Managing Director S. Renganathan 

A strong second quarter, during which its loan book crossed the milestone of Rs 1 trillion, another first by a local private bank, has generated noteworthy growth in key indicators for the Commercial Bank of Ceylon Group for the six months ended 30th June 2021.

Comprising of Sri Lanka’s largest private sector bank, its subsidiaries and an associate, the Group reported gross income of Rs 79.931 billion for the period, reflecting a growth of 6.34% over the corresponding six months of 2020 and an improvement of 11.23% in the second quarter of 2021.

The Group converted the first quarter’s negative growth of 2% in interest income to an improvement of 9% in the second quarter, to end the first half of 2021 with interest income of Rs 63.355 billion, which was an increase of 3.2% over the first half of last year. With interest expenses for the six months down 16.65% to Rs 32.197 billion, the Group posted a net interest income of Rs 31.158 billion for the period under review, achieving a growth of 36.86% and 57.06% respectively for the six months and the second quarter.

“An increase in operating income from the growth in lending, an improvement in net fees & commission income and significant gains in some of the components of other income was partly offset by a substantial growth in impairment charges in the six months reviewed, but we are pleased with the overall results because we have built on the momentum of the first quarter and improved many of the core ratios and key performance indicators,” Commercial Bank Chairman Justice K. Sripavan commented.

Commercial Bank Managing Director Mr S. Renganathan elaborated that the Bank’s CASA ratio had improved to 45.37% from 42.72% at the end of 2020 and 40.79% at end June 2020. “We have also sustained steady improvements in capital adequacy ratios, non-performing loan ratios, provision cover and interest margins while grappling with the challenges posed by the global pandemic. We extended our fullest support for the implementation of Government initiatives to minimise the impact of COVID-19 on businesses and the community and to stabilise the economy. This included providing relief to borrowers and participating in the ‘Saubhagya’ loan scheme in addition to implementing the Bank’s own concessionary lending schemes,” he said. “We believe we now have a blueprint for achieving well-balanced growth in adverse conditions that will be of value in the years ahead.”

“We are particularly encouraged to see our loan book surpass Rs 1 trillion, making Commercial Bank the first private sector bank in Sri Lanka to have three key balance sheet indicators that exceed Rs 1 trillion. Our assets crossed this threshold in 2016 while deposits achieved it in 2019,” Mr Renganathan added.

Total operating income of the Group for the six months grew by 30.78% to Rs 46.344 billion, while impairment charges and provisions for other losses rose by 47.44% to Rs 13.654 billion consequent to a management decision to make provisions on a prudent basis, for exposures to identified risk-elevated industries.

As a result, net operating income grew by 24.88% to Rs 32.690 billion, but with operating expenses being restricted to Rs 14.079 billion, an increase of 8.42%, the Group posted an operating profit of Rs 18.611 billion before VAT on financial services for the six months, reflecting robust growth of 41.09% over the corresponding six months of the previous year. VAT on financial services increased by 37.82% to Rs 2.857 billion resulting in the Group achieving profit before income tax of Rs 15.754 billion for the first half of 2021, an improvement of 41.71% over the corresponding six months of 2020.

Income tax for the period under review amounted to Rs 3.400 billion, down 7.33% as a result of a reversal of excess in provisions for income tax made in 2020. This was due to the Bank’s provisions for income tax being computed at 28% on the basis that the 24% rate proposed in the last government budget to be effective from 1st January 2020, had not been enacted. The excess provision was reversed during the first quarter of 2021 as advised by the CA Sri Lanka.

Consequently, the Commercial Bank Group posted profit after tax of Rs 12.354 billion for the six months recording a growth of 65.87%, with growth in the second quarter alone amounting to 52.93%. Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs 15.420 billion for the period, a growth of 47.61% and profit after tax of Rs 12.134 billion, an improvement of 74.31%.

Total assets of the Group grew by Rs 172 billion or 9.77% over the six months to Rs 1.935 trillion as at 30th June 2021. Asset growth over the preceding 12 months was Rs 368 billion or 23.49% YoY.



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Business

Inflation curbed by govt. fuel subsidy introduction and surcharge on vehicle import tax – CBSL Governor

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CBSL Governor Dr. Nandalal Weerasinghe

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’’.

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PM warns Sri Lanka’s waste crisis is a ‘disaster waiting to happen’

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The third ICPIES being addressed by Prime Minister Dr. Harini Amarasuriya.

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.

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Mention of possible future inflation dampens investor appetite

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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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