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DFCC Bank records strong performance despite economic challenges in Q3 2023

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Group Total operating income up by 43% to LKR 31 Bn

Group records Operating Profit Before Taxes on Financial Services of LKR 11 Bn.

Group PAT of LKR 7 Bn

Impairment charge of LKR 12 Bn reflective of present economic stresses

During the period under review, DFCC Bank remained committed to providing high-quality, customer-centric banking services across the country despite facing unprecedented challenges that affected the banking industry. As a result of this dedication, the Bank has recorded a strong performance for the Q3 of 2023.

The Central Bank of Sri Lanka’s (CBSL) timely policy rate relaxation has enabled downward adjustments to the historically high-interest rates, and improved economic conditions would help boost credit flows to the economy in the period ahead. Meanwhile, a reduction was also observed in the yields on government securities with falling risk premia following the finalisation of the debt treatment on rupee-denominated instruments under the domestic debt optimisation (DDO) programme.

The Bank has aligned with the CBSL guidelines and reduced lending and deposit rates to pass the benefits of the continued easing of monetary conditions to individuals and businesses adequately and swiftly, thus supporting the envisaged rebound of the economy.

The following commentary relates to the unaudited Financial Statements for the period ended 30 September 2023, presented in accordance with Sri Lanka Accounting Standard 34 (LKAS 34) on “Interim Financial Statements”.

DFCC Bank PLC, the largest entity within the Group, reported an Operating Profit Before Taxes on Financial Services of LKR 10,693 Mn, Profit Before Income Tax (PBT) of LKR 8,305 Mn and a Profit After Tax (PAT) of LKR 5,498 Mn for the period ended 30 September 2023. This compares with an Operating Profit Before Taxes on Financial Services of LKR 2,269 Mn, PBT of LKR 1,420 Mn and a PAT of LKR 1,043 Mn in Q3 of 2022. The Group recorded an Operating Profit Before Taxes on Financial Services of LKR11,069 Mn, PBT of LKR 9,938 Mn and PAT of LKR 7,064 Mn for the period ended 30 September 2023 compared to 2,612 Mn, LKR 1,762 Mn and LKR 1,320 Mn, respectively, in 2022. All the member entities of the Group made positive contributions to this performance. The Bank’s Return on Equity (ROE) increased to 11.66% during the period ended 30 September 2023 from 5.04% recorded for the year ended 31 December 2022. The Bank’s Return on Assets (ROA) before tax for the period ended 30 September 2023 is 1.76% compared to 0.46% for the year ended 31 December 2022.

Net Interest Income

The Bank’s Net Interest Income (NII) increased 26% over Q3 of 2022 to reach LKR 23,655 Mn by the end of September 2023. Both deposit and lending interest rates have continued to adjust downwards with the broader guidelines provided by the Central Bank in line with the relaxed monetary policy stance of the Central Bank. Accordingly, the Bank has reduced both lending and deposit rates to pass on the benefits of the continued easing of monetary conditions to individuals and businesses adequately and swiftly, thereby supporting the envisaged rebound of the economy. While lower interest rates may have resulted in reduced interest income and expenses, in nominal terms, Net Interest Income (NII) has continued to improve as a metric during the period under review as a result of the Bank’s strategy of investing in high-yield government securities.

Strategically, the Bank thus increased its fixed-income investment portfolio, contributing significantly to increased interest income. The interest margin increased from 4.95% in September 2022 to 5.45% by September 2023.

Fee and Commission Income

The Bank’s dynamic strategies and the efforts of its dedicated teams led to increased remittances, trade-related commissions, and other fee income lines, which contributed to the increase in non-funded business during the period. Fee income generated by credit cards also increased significantly, in line with the volume of the transactions. Accordingly, net fee and commission income have increased by 40% to LKR 2,848 Mn for the period ended 30 September 2023, compared to LKR 2,031 Mn for the comparative period in 2022.

Impairment Charge on Loans and Other Losses

The impaired loan (stage 3) ratio increased from 4.36% in December 2022 to 6.13% as of 30 September 2023, continuing the prevalent trend amidst the present economic conditions. However, the Bank expects this trend to moderate and potentially improve towards the end of the year, reflecting positive developments in the macroeconomic environment coupled with the Bank’s concerted efforts regarding recoveries. To address the current and potential future impacts of the present economic conditions on the lending portfolio, the Bank made adequate impairment provisions during the period by introducing changes to internal models to account for unseen risk factors in the present highly uncertain and volatile environment, including additional provisions made for the Bank’s exposure to risk elevated sectors.

The Bank has used significant judgment using the information available at the reporting date to estimate the recoverable value of foreign currency-denominated investment securities issued by the Government of Sri Lanka. Accordingly, an impairment charge has been recognised to maintain a provision cover of 45% on the above investments.

Accordingly, with these provisions to address the additional risks in the economic environment, the impairment charge recorded at LKR 12,113 Mn for the period ended 30 September 2023, compared to LKR 11,962 Mn in the comparable period.

Operating Expenses

Operating expenses for the period ended 30 September 2023 increased to LKR 8,370 Mn compared with LKR 7,382 Mn during the corresponding period in 2022, primarily due to the increase in inflation. However, the Bank has taken numerous cost control measures within the Bank, resulting in operating expenses being curtailed and managed at these levels.

Other Comprehensive Income

Changes in the fair value of investments in equity securities and fixed-income securities (treasury bills and bonds) and movement in hedging reserves are recorded through other comprehensive income. Due to the application of hedge accounting, the impact on the total equity of the Bank due to exchange rate fluctuation was minimised. A fair value gain of LKR 6,431 Mn was recorded on account of equity securities outstanding as at 30 September 2023. The increase in the share price of Commercial Bank of Ceylon PLC during the period was the main contributor to the reported fair value gain in equity securities. The favourable movement in treasury bills and bond yields also resulted in a fair value gain of LKR 3,239 Mn during the period.



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HNB partners IDEAL Motors to drive financial freedom through vehicle leasing solutions

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HNB, Senior Vice President/Head of Retail Banking, Kanchana Karunagama and Director of Legal & Corporate Affairs, Nimisha Welgama sharing the MoU, alongside the representatives from both organizations

HNB PLC, the leading private bank in Sri Lanka, has partnered with IDEAL Motors (Pvt) Limited to provide customers with attractive leasing solutions for brand-new vehicles & generators .

The partnership introduces a range of benefits designed to support individuals, entrepreneurs, and businesses seeking reliable vehicle and power solutions. Through this collaboration, customers can access structured lease facilities, special interest rates, free life insurance coverage, and attractive discounts through HNB General Insurance.

Commenting on the partnership, HNB, Senior Vice President/ Head of Retail Banking, Kanchana Karunagama, said, “At HNB, we believe that the right financial support can help people and businesses move forward with greater confidence. This partnership with IDEAL Motors shows our commitment to creating meaningful solutions that make vehicle and power investments more accessible, while helping our customers achieve their personal and business aspirations. By combining HNB’s financial expertise with IDEAL Motors’ industry capabilities, we are creating opportunities that support the ambitions of Sri Lankans and contribute towards a stronger, more connected economy.”

Customers purchasing vehicles through IDEAL Motors will also benefit from exclusive offers including free registration, and discounts on Bolero Maxx Pik-Up, Alfa Plus Load Carrier, Mahindra Pik-Up Single Cab, Mahindra Pik Up Double Cab, XUV 3XO vehicles, creating greater value throughout their ownership journey.

IDEAL Motors (Pvt) Limited, Director Legal and Corporate Affairs, Nimesha Welgama, said, “Our collaboration with HNB represents a shared commitment to supporting Sri Lankans in achieving greater financial independence through accessible ownership solutions. By combining IDEAL Motors’ mobility and power solutions with HNB’s financial expertise, we aim to empower individuals and businesses with opportunities that contribute to economic progress and community development. This partnership highlights our vision of creating lasting value by enabling customers to confidently invest in their future.”

With IDEAL Motors recognised for its diverse portfolio of automotive and power solutions, and HNB’s extensive expertise in financial services, the partnership aims to provide a seamless experience from selection to ownership, supported by flexible financing options and customer focused solutions.

The partnership further strengthens HNB’s commitment to supporting economic progress by providing financial solutions that enable customers to invest in personal mobility, commercial growth, and business continuity. Through collaborations with leading industry partners, HNB continues to expand opportunities for Sri Lankans while delivering a banking experience built around accessibility, trust, and value.

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Sri Lanka Insurance Corporation General and the Ministry of Education committed to protect Sri Lanka’s schoolchildren

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Sri Lanka Insurance Corporation General Ltd (SLICGL) and the Ministry of Education, Higher Education and Vocational Education share a commitment to protect Sri Lanka’s children throughout their school education. The pledge is delivered through the Suraksha Student Insurance Scheme, which protects over 4 million school children.

The Government of Sri Lanka, through the Ministry of Education, Higher Education and Vocational Education, provides the Suraksha Student Insurance Scheme free of charge to schoolchildren throughout the country. SLICGL is proud to partner with the Ministry in delivering this national initiative, which helps safeguard students against the financial impact of unforeseen circumstances.

Eligible students include those aged 5-21 years in Grades 1-13 from government schools, government-approved private schools, and Pirivena education, as well as students aged 4-21 years in assisted special schools.

The scheme provides hospitalisation, outpatient and critical illness cover, as well as personal accident cover for permanent and temporary disability, together with a life insurance benefit for children from low-income families on the death of a parent. Cover applies to incidents within and outside school premises.

For a child, an illness or accident can be far more than a temporary setback. It can place added pressure on a family and, in some circumstances, disrupt schooling. Suraksha acts as a safety net, giving children and their families greater peace of mind and helping them stay in school despite life’s uncertainties. The scheme is easily accessible through SLICGL’s islandwide network of 200 branches and customer service centres.

Children’s Day is a celebration of hope, the hope for every child to have the opportunity to learn, grow and build a better future. Celebrating children also means protection, not for a single day but for every day they spend in the classroom.

Commemorating Children’s Day, SLICGL extended support towards the educational needs of children at an underprivileged school. The project highlighted the company’s belief in protecting the future not only by being supportive when the unexpected happens, but also in helping create an environment in which children can learn, grow and fulfil their potential.

As Sri Lanka’s National Insurer, SLICGL’s role goes further than protecting people against risk. It is also about contributing to a stronger, safer and more resilient country as children’s education, wellbeing and aspirations contribute directly to help build the journey ahead.

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Vietjet launches Hanoi to Prague route via Almaty, expanding to Central Asia and Europe

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Inaugural celebrations for the new Prague to Almaty and Prague to Hanoi services mark an important milestone in Vietjet’s intercontinental network expansion

Vietjet, which already flies between Colombo and Ho Chi Minh City, has officially launched new services connecting Hanoi with Almaty, Kazakhstan, and Prague, Czech Republic, as well as Almaty with Prague, expanding its intercontinental network and marking its entry into the European Union. The new air links offer more affordable travel options while fostering greater tourism, trade and cultural exchange between Asia and Europe.

For Sri Lanka, the new routes widen the network that Vietjet is building out of Colombo. The airline has operated non-stop flights between Colombo and Ho Chi Minh City since August 2026, three times a week on Tuesdays, Thursdays and Saturdays, while its new Ho Chi Minh City to Maldives service via Colombo is scheduled to begin on 5 December 2026. With Hanoi now linked to Central Asia and Europe, Sri Lankan travellers have a growing choice of destinations reachable through Vietjet’s extensive network.

The inauguration ceremonies took place at Almaty International Airport and Václav Havel Airport Prague on 10 October, amid a warm welcome from local leaders, residents and visitors. The inaugural flights were greeted with traditional water cannon salutes and performances showcasing local cultural heritage, marking the beginning of new journeys connecting the three regions and welcoming international travellers to Vietnam. Passengers on the inaugural flights also received commemorative gifts from Vietjet and the airports, adding a special touch to their journeys.

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