Business
High impairment provisions neutralise solid 6-month operational growth of ComBank Group
The Commercial Bank Group has reported a six-month financial performance that mirrors the impacts of the country’s macro-economic variables, with solid operational gains negated by extraordinary provisioning in the second quarter for impairment charges and other losses.
Comprising of the Commercial Bank of Ceylon PLC, its subsidiaries and an associate, the Group posted a gross income of Rs 119.517 billion for the six months ended 30th June 2022 and Rs 64.944 billion for the second quarter, achieving a healthy topline growth of 49.52% and 66.41% respectively.
Interest income grew by 39.08% to Rs 88.117 billion for the six months, and by 58.78% to Rs 50.270 billion for the second quarter primarily due to repricing of assets. With rising interest rates and the consequent repricing of deposits, interest expenses increased by 47.23% to Rs 47.404 billion for the six months, and by 77.61% to Rs 28.380 billion for the second quarter. As a result, net interest income for the six months improved by 30.66% to Rs 40.713 billion, while net interest income for the second quarter reported a higher growth of 39.59% to Rs 21.890 billion.
Commenting on the period reviewed, Commercial Bank Chairman Prof. Ananda Jayawardane said: “Our six-month results are a case study on how macro-economic challenges can neutralise solid operational performance. We have achieved encouraging operational performance across the board, but have been compelled, as any prudent institution would do, to make adjustments that respond to the deteriorating economic environment, ensuring that the Bank meets its obligations to all stakeholders and retains its inherent financial strength and stability.”
The Bank’s Managing Director and CEO Mr Sanath Manatunge added: “The mercurial policy environment we operate in, requires agile responses as well as forward-looking decisions, however tough they may be. Our second quarter results are particularly influenced by additional impairment charges that impacted on profit growth, but represent a realistic management of credit risk. Banks will be required to perform a balancing act of this nature in the short and medium term until external conditions improve.”
According to the Interim Financial Statements filed with the Colombo Stock Exchange (CSE), the Commercial Bank Group achieved a solid growth in fee and commission income, which was up 65.56% to Rs 11.759 billion for the six months mainly due to a noteworthy improvement in fee and commission income of 79.21% to Rs 6.366 billion for the second quarter; which helped net fee and commission income for the first half of 2022 to improve by 55.41% to Rs 8.878 billion compared to Rs. 5.712 billion reported for the corresponding period of 2021.
Further, other income, which comprises of net gains from trading, net gains from derecognition of financial assets and net other operating income, grew by 107.32% to Rs 19.642 billion for the six months and by 117.88% to Rs 8.309 billion for second quarter of 2022. Net gains from trading for the six months amounted to Rs 32.102 billion compared to Rs 1.425 billion recorded for the corresponding period of the previous year. This was primarily from realized and unrealized gains from forward exchange contracts, spot and swap transactions. However, the revaluation of foreign currency assets and liabilities and the exchange impact on impairment charges on loans and advances and Government Securities denominated in foreign currency resulted in a net other operating expense of Rs 12.524 billion for the first half of 2022, compared to the net other operating income of Rs 5.213 billion reported for the corresponding period of last year.
Total operating income for the six months under review amounted to Rs 69.232 billion, an improvement of 49.39%. The figure for the second quarter was Rs 34.988 billion, reflecting an even stronger growth of 57.72%.
The Group reported impairment charges and other losses totaling to Rs 35.219 billion for the six months and Rs 29.258 billion for the second quarter alone, reflecting increases of 157.93% and 350.24% respectively. The exchange impact on impairment charges on loans and advances and Government Securities denominated in foreign currency was adjusted in Net Other Operating Income where the corresponding exchange gains are recognised.
Elaborating on the increased impairment provisioning, Mr Manatunge said the Bank provided substantial impairment charges on loans and advances in respect of individually significant customers as well as collectively for other customers and those customers in the risk-elevated sectors, as necessitated by the most recent developments in macro-economic indicators impacting the credit risk. “We also continue to recognise additional impairment provisions by way of management overlays on account of loans under moratoriums”, he said. “In the second quarter, the Bank also recognised substantial impairment provisions on its foreign currency denominated government securities owing to the recent downgrading by rating agencies of Sri Lanka’s sovereign, and the announcement by the government that it is considering a consensual restructuring of the country’s external debt via an economic adjustment programme supported by the IMF. Accordingly, the Bank has increased impairment provisions on account of foreign currency denominated government securities during the second quarter.”
Consequently, the growth in the net operating income for the six months under review reduced to 4.05% or Rs 34.014 billion, while the figure of Rs 5.730 billion for the second quarter reflected a decline of 63.47%.
Operating expenses increased by 28.07% for the six months to Rs 18.031 billion, and by 32.50% for the second quarter to Rs 9.311 billion, mainly due to increases in staff-related expenses and other operating expenses owing to inflation and the sharp depreciation of the rupee during the first half of 2022, which had a significant impact on expenses paid in foreign currency such as card-related payments, license fees and annual maintenance charges. As a result, the Group’s operating profit before Value Added Tax (VAT) on financial services reduced by 14.12% to Rs 15.982 billion for the six months under review and by 141.36% to a loss of Rs. 3.581 billion for the second quarter.
With VAT on financial services reducing by only 8.91% to Rs 2.603 billion, the Group reported a profit before tax of Rs 13.376 billion for the six months, recording a decline of 15.09% over the first half of 2021. Income tax for the period increased by 23.47% to Rs 4.198 billion despite the drop in pre-tax profit for the period under review as the figure for the corresponding six months of 2021 was reduced by the reversal of an over-provision for 2020 resulting from the reduction in the corporate tax rate from 28% to 24%, which was adjusted in the first quarter of 2021. Therefore, the Group’s profit after tax of Rs 9.178 billion for the six months reflected a decline of 25.71% compared to the corresponding period of last year.
Taken separately, Commercial Bank of Ceylon PLC posted a profit before tax of Rs 12.576 billion for the six months, recording a drop of 18.44% and a profit after tax of Rs 8.592 billion, a decline of 29.19% compared to profit before tax of Rs. 15.420 billion and profit after tax of Rs. 12.134 billion reported for the corresponding period of the last year.
Western Province maintains its dominant position, accounting for 42.4% of nominal GDP
The 2024 provincial GDP data reaffirms the profound and enduring structural asymmetry in Sri Lanka’s economic geography. The Western Province continues to function as the nation’s overwhelming economic core, while the second and third runners-up, the North Western and Central Provinces respectively, operate on a markedly different scale and sectoral foundation.
The Western Province maintains its dominant position, accounting for 42.4% of the country’s nominal GDP. This preeminence is rooted in its commanding role across the high-value Services and Industry sectors, where it contributes 44.5% and 47.6% of national output, respectively. Its economy is distinctively modern, with a scant 2.3% reliance on agriculture and over 98% of its output derived from industry and services. This concentration of finance, trade, administration, and manufacturing creates an unmatched gravitational pull for investment and talent.
In stark contrast, the combined economic share of the North Western (11.5%) and Central (10.7%) Provinces is just over half that of the Western Province alone. Their paths to relevance are fundamentally different. The North Western Province has solidified its role as the nation’s agricultural heartland, contributing a full 20.0% of national agricultural activity. It also holds a significant, though secondary, position in industry at 12.0%. Its internal economic composition is more balanced across sectors than the west, with a notable reliance on industry (29.1% of its own GDP) alongside agriculture.
The Central Province, meanwhile, presents a more services-oriented profile among the runners-up, contributing 10.7% to the national services total. It also holds important shares in agriculture (13.9%) and industry (9.6%). Internally, its economy mirrors the national structure most closely among major provinces, with services constituting about 63% of its output. This suggests a diversified regional economy centered on urban hubs like Kandy, but one that lacks the concentrated high-end service power of Colombo.
The comparative analysis reveals a clear hierarchy. The Western Province is the integrated, metropolitan driver of the modern economy. The North Western Province serves as a vital agro-industrial base, and the Central Province as a diversified regional center. Despite a noted increase in the combined share of the other provinces, the gap remains vast. The economic landscape is thus characterized not by convergence, but by a persistent and specialized asymmetry, where the runners-up support the national economy through different, but essential, sectoral strengths, all while operating in the long shadow of the western province.
by Sanath Nanayakkare
Sri Lanka Insurance Life and Sri Lanka Insurance General, in collaboration with the National Disaster Relief Services Centre (NDRSC), extended vital assistance to 1,000 families affected by the recent ‘Ditwah’ cyclone. The relief initiative was carried out in two phases on 30th November and 2nd December 2025, reflecting the company’s continued commitment to supporting communities in times of distress.
Dry ration packs were distributed through the NDRSC to the Maharagama Urban Council and the Divulapitiya Pradeshiya Sabha, ensuring that aid reached the most affected households swiftly and efficiently. Both distribution programmes were held with the participation of local authorities and the management teams of SLIC Life and SLIC General, further strengthening the company’s close partnership with the communities it serves.
Speaking on the initiative, Chairman of Sri Lanka Insurance, Nusith Kumaaratunga, stated; “Sri Lanka Insurance has always placed community wellbeing at the heart of its purpose. In difficult times such as these, it is our responsibility to stand with the families who have been affected and offer meaningful support. This relief effort reflects our ongoing commitment to uplift communities and reinforces our role as a trusted national insurer focused on protection, care, and compassion.”
In addition to the relief programme, Sri Lanka Insurance has implemented extended operating hours at selected SLIC General branches in the affected areas to ensure uninterrupted service. Claims, customer care teams, and branch staff are working beyond regular hours to provide prompt assistance to policyholders impacted by the severe weather conditions.
Sri Lanka Insurance remains dedicated to safeguarding its customers and supporting communities across the nation, reaffirming its longstanding promise of protection, stability, and service excellence.
Jaffna Hindu College was named as one of the winners at the regional award ceremony of the prestigious AIA Healthiest Schools Competition, a flagship initiative by AIA Group aimed at promoting healthier habits among students across Asia-Pacific region through innovative school-based projects. The competition, which drew a record number of entries from eight regional markets, recognises schools that implement innovative and impactful initiatives in the areas of healthy eating, active living, mental wellbeing, and sustainability. Jaffna Hindu College stood out in the Active Lifestyles Award Category for its creative and community-focused project that introduced a bicycle rental system, ensuring greater access to physical activity for all students and encouraging healthier lifestyles across the region.
The winners of AIA Healthiest Schools programme were honoured at a vibrant regional awards ceremony in Da Nang, Vietnam, where the prize money was awarded to the respective schools to support the ongoing health and wellbeing initiatives.
The Cycling Club was introduced to make physical activity accessible and enjoyable for all students. The club introduced a bicycle rental system, managed via a custom software platform, ensuring equitable access regardless of financial background. Students participated in a cycle parade and three themed challenges focused on endurance, speed, and teamwork. The initiative quickly became popular, engaging over 100 students and receiving enthusiastic support from teachers, parents, and local businesses. Experienced cyclists from the community volunteered as coaches, while cycling organisations provided safety training and route planning.
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