The Commercial Bank Group led by Sri Lanka’s benchmark private sector bank has generated strong growth in fund-based operations in the first quarter of 2021, with the continuing trend of interest expenses reducing at a significantly higher rate than interest income combined with judicious management of core banking operations.
Comprising of Commercial Bank of Ceylon PLC, its subsidiaries and the associate, the Group reported a Gross income of Rs 40.905 billion for the three months ended 31st March 2021, with net interest income growing by a substantial 21.08% to Rs 15.477 billion consequent to interest expenses reducing by 17.14% to Rs 16.218 billion in contrast to a marginal decline of 2.04% in interest income to Rs 31.695 billion due to the reduction in interest rates.
Notably, the growth in net interest income was achieved despite a substantial increase in deposits and excess liquidity being invested in low-yielding treasury assets in view of the conditions that prevailed in the market during the three months reviewed, the Bank said.
The Bank further improved its CASA ratio to 45.26% — possibly the best in the industry — from 42.72% at end 2020, contributing to a supplementary reduction in interest expenses. CASA deposits grew by 36.04% YoY, accounting for over 70% of the YoY growth in total deposits, and timely re-pricing of liabilities further reduced the cost of funds.
Among other components of gross income, other income (comprising of net gains/losses from trading, net gains/losses from de-recognition of financial assets and net other operating income) grew by 22.58% to Rs 5.661 billion while net fees and commission income improved by 23.55% to Rs 3.023 billion, the Bank said in a filing with the Colombo Stock Exchange (CSE). Interest income continued to be the dominant source of income, accounting for 77.48% of gross income, while net interest income accounted for 64.06% of total operating income.
Total operating income for the quarter amounted to Rs 24.161 billion, reflecting an increase of 21.73%. Impairment charges and provisions for other losses were raised by 7.56% to Rs 7.156 billion in keeping with a management decision to make provisions on a prudent basis, for exposures to identified risk-elevated sectors.
As a result, net operating income grew by 28.88% to Rs 17.005 billion, but the Group’s success in containing operating expenses to Rs 7.052 billion, an increase of 4.53%, enabled it to post an operating profit of Rs 9.952 billion before VAT on financial services for the three months, achieving a noteworthy growth of 54.35% over the corresponding three months of the previous year. Meanwhile, VAT on financial services increased by 53.39% to Rs 1.548 billion in line with the growth in profits, and the Group reported profit before income tax of Rs 8.404 billion for the three months, an improvement of 54.55% over the corresponding quarter of 2020.
Commenting on the results achieved, Commercial Bank Chairman Justice K. Sripavan said: “Our performance in the latter part of 2020 laid the foundation for this growth, which has been achieved by a careful balancing of several countervailing factors arising from developments impacting the market and our response to them, including judicious provisioning for impairment on the expected credit losses. We expect to maintain this trajectory of growth in the short term, provided that there are no major shocks ahead of us.”
Commercial Bank Managing Director Mr S. Renganathan concurred: “Although the Bank has reduced the percentage of its loan book under moratorium to approximately 6%, the impact of the third wave of COVID-19 is yet to be ascertained and the Bank will be required to factor in these impacts in its decisions while managing interest margins and strategising on its financial assets portfolio and foreign currency operations. As a matter of prudence, the Bank has made an additional impairment provision against a part of the accrued interest on moratorium facilities during the quarter.”
He noted that the Bank had made a gain of Rs 6.513 billion on revaluation of assets and liabilities in the first quarter of last year, but in contrast, had booked a gain of only Rs 3.524 billion on revaluation of assets and liabilities in the quarter reviewed, resulting in net other operating income declining by 44.42% to Rs 3.670 billion. On the other hand, a significant growth of 391% was recorded in net gains on de-recognition of financial assets, which increased from Rs 361.7 million to Rs 1.776 billion. This was achieved through the sale of government bonds.
Income tax for the period under review amounted to Rs 1.607 billion, down a marginal 1.01% 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 three months under review as CA Sri Lanka had subsequently advised that companies may consider the new tax rate as enacted.
Consequently, the Commercial Bank Group posted profit after tax of Rs 6.797 billion for the three months reviewed, recording a growth of 78.20%. Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs 8.183 billion for the quarter, a growth of 56.51% and profit after tax of Rs 6.658 billion, an improvement of 79.63%.
Total assets of the Group grew by Rs 62 billion or 3.51% over the three months to Rs 1.824 trillion as at 31st March 2021. Asset growth over the preceding 12 months was Rs 351 billion or 23.83% YoY.
Gross loans and advances increased by Rs 24.80 billion or 2.58% to Rs 986.662 billion, recording a monthly average growth of Rs 8.268 billion. The growth of the loan book over the preceding year was 2.74%.
Total deposits of the Group recorded a noteworthy growth of Rs 60 billion or 4.66% in the quarter reviewed at a monthly average of Rs 20 billion to stand at Rs 1.347 trillion as at 31st March 2021. Deposit growth since 31st March 2020 was Rs 227 billion or 20.19% at a monthly average of Rs 18.9 billion. A significant milestone was recorded in the quarter reviewed when local currency deposits crossed the Rs 1 trillion mark for the first time.
In other key indicators, the Bank’s Tier 1 Capital Adequacy Ratio (CAR) stood at 12.917% as at 31st March 2021, and its Total Capital Ratio at 16.514%, both comfortably above the revised minimum requirements of 9% and 13% respectively imposed by the regulator consequent to the COVID-19 pandemic.
The Bank’s gross non-performing loans (NPL) ratio improved to 4.94% from 5.11% at end 2020 and 5.27% a year previously, recording a notable YoY improvement of 33 basis points, while its net NPL ratio reduced to 1.93% from 2.18% as at 31st December 2020 and 3.24% as at 31st March 2020, reflecting YoY improvement of 131 basis points. As a result, provision cover based on regulatory requirements improved to 60.98% at the end of the reviewed quarter, from 57.42% at end 2020 and 38.41% a year previously.
The Bank’s interest margin also improved to 3.46% from 3.17% at end 2020, but was lower than the 3.52% of the corresponding quarter of the previous year. Net assets value per share increased to Rs 133.58 from Rs 130.35 a year ago, while return on assets (before taxes) and return on equity stood at 1.88% and 17.05% respectively for the three months ended 31st March 2021 compared to 1.51% and 11.28% for 2020.
The Bank improved its cost to income ratio inclusive of VAT on financial services to 35.53% from 39.96% at end 2020 and 39.06% a year previously. The cost to income ratio excluding VAT on financial services recorded an equally impressive improvement, from 33.83% a year ago to 33.95% at 31st December 2020 and 29.03% at the end of the quarter under review.
SLT-MOBITEL powers ANANKE IoT Services to shine at Globee® Awards
SLT-MOBITEL, the National ICT, Telecommunications and Mobile Services Provider, is proud to announce its partner ANANKE IoT Services (Pvt) Ltd has been conferred a Gold award under the ‘Start-up of the Year – IT Category’ at the 16th Annual 2021 IT World Awards. Organizers of the world’s premier business awards programs and business ranking lists, The Globee® Awards; recognised ANANKE IoT’s Smart Bins Project, powered by NB-IoT technology from SLT-MOBITEL, the undisputed leader of IoT services and related digital transformation in Sri Lanka.
SLT-MOBITEL’s NB-IoT network enables the entire device connectivity chain of the Smart Bins Project and is Sri Lanka’s only such network to-date. NB-IoT is the GSMA standard for Low-Power-Wide-Area Internet of Things connectivity, which is particularly suited to ensure the battery life of a sensor extends to up to 10 years. As the only telco to offer this advanced technology in Sri Lanka, SLT-MOBITEL was perfectly positioned to support ANANKE IoT Services for quick deployment of its Smart Bins solution. This is the first large-scale NB-IoT enabled hardware project in Sri Lanka and utilizes, ANANKE IoT’s in-house built proprietary platform. (SLT)
Dialog Television extends access to Nenasa and Guru TV education channels free of charge
Furthering its efforts to ensure that no child is left behind in continuing their education, Dialog Axiata Group, Sri Lanka’s premier connectivity provider, extended free access to its education bouquet Nenasa Sinhala, Nenasa Tamil and Guru TV channels through Dialog Television and ViU App.
Despite the learning loss that ensued the pandemic, Dialog remains committed in its resolve to ensuring that children across the country have equitable access to education. Both Dialog Television prepaid and postpaid customers can access these channels for free. Nenasa Sinhala (Ch. 24) and Nenasa Tamil (Ch. 25) cover grade 3 to 13 Government syllabi, while Guru TV (Ch. 22) covers grade 5 to 13 Government syllabi, all conducted by qualified teachers with immersive, engaging and innovative teaching techniques. Furthermore, this education channel bouquet and over 160 supplementary lessons and educational content can also be accessed via ViU App on any smartphone, ViU Hub and ViU Mini for free, without any data charges on the Dialog network.
Commenting, Chirantha De Zoysa, Head of Business – Dialog Television said, “Extending Nenasa Sinhala, Nenasa Tamil and Guru TV education channels for free is part of our overarching efforts in providing schoolchildren across the country with equitable access to education to achieve their aspirations. While the pandemic has magnified the disparities in education and underscored the importance of inclusive education, Dialog remains resolute in continuing to bridge this gap.”
This is yet another initiative by Dialog in its continued efforts of supporting students across the country with their educational endeavours. In addition to this initiative, Dialog powers a range of educational platforms under the Nenasa initiative; Nenasa TV, Nenasa Smart School, Nenasa App and the toll-free Nenasa 1916 distance learning helpline. Dialog also endeavoured to provide 100,000 schoolchildren in need with Data Scholarships under the ‘NanaDiri Data Scholarship’ programme to facilitate their online learning from home. Furthermore, the company extended free access without any data charges to e-Thaksalawa, the National Learning Content Management System (LCMS)/Learning Management System (LMS) and to all official e-Learning platforms of State Universities under the purview of the University Grants Commission.
LITRO GAS encouraging industrial sectors with inter-fuel conversion
Switching to clean and efficient energy is a constant need that arises among industrial sectors in the world – Sri Lanka is no exception.
Encouraging industries across sectors to go for LPG instead of kerosene or firewood, has been a key component of Litro Gas Lanka’s strategy to drive efficiency levels and uplift industries to utilize clean and safe energy.
The domestic usage of LPG in Sri Lanka stands at around 35% of the population who use it as their primary source of energy – there is tremendous potential for the LPG sector since alternate energy sources such as firewood and kerosene are still in use. Empowering communities to upgrade to clean energy from these energy sources causing indoor pollution is a key area of consideration for Litro Gas Lanka.
Litro Gas Lanka has the capability and the expertise to provide LPG in bulk to large commercial and industrial operations that rely on efficient, clean energy. “These operations require bigger, bulk facilities due to the fact that they need faster, consumption efficient energy”, says Janaka Pathirathna, Director – Sales & Marketing at Litro Gas Lanka.
“We provide all the equipment needed – from storage tanks, vaporizers, pressure regulators and a piped network to the application in keeping with the highest safety standards. Litro Gas has the capacity and necessary infrastructure in place in designing, installing, maintaining and operating in-house bulk facilities.”
Commenting on switching to LPG, Lahiru Gawarammana – Senior Manager – Technical & Professional Business at Litro Gas Lanka, “Driving application and innovation is the key to achieving energy efficiencies for all industries. Direct energy application and a clean, smooth operation of LPG are indeed among the powerful factors in favour of LPG driven energy sources.”
Among innovative solutions Litro Gas Lanka has pioneered in the LPG LOT (Liquid Off-take) Systems which are primarily used in commercial & industrial applications. “LOT system will be the ideal solution to an application which needs high LPG flow with a less space availability. The system offers the large flow of a bulk tank and easy functionality of cylinder manifold. “
Litro Gas Lanka maintains 78% market share in the country’s LPG sector and operates over 14,000 points-of-sale, 1,500 home delivery hubs through a network of 42 distributors. A seamless supply of LPG throughout Sri Lanka ensures reaching over 4 million homes, while powering up countless industries and businesses that require a high output from clean energy.
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