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Cost efficiencies drive vibrant 9-month growth for ComBank

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Commercial Bank Chairman Justice K. Sripavan (left) and MD S. Renganathan

The Commercial Bank of Ceylon Group has achieved characteristically equitable growth for the nine months ending 30th September 2021, despite a slowing down in some key contributors in the third quarter of the year.

The Group, comprising the Commercial Bank of Ceylon PLC – Sri Lanka’s largest private sector bank – its subsidiaries and an associate, has reported a gross income of Rs 120.050 billion for the period, an improvement of 5.66% over the corresponding nine months of 2020, with the third quarter recording a growth of 4.34% in comparison with the 6.34% growth achieved for the first half of 2021.

Interest income, the biggest component of gross income, grew by 3.43% to Rs 96.227 billion, improving on the 3.20% growth achieved up to June 2021, and interest expenses continued to decline, albeit at a lower rate than in the first half of the year, the Group said. Consequently, interest expenses reduced by 13.42% to Rs 48.693 billion for the nine months, enabling the Group to post net interest income of Rs 47.533 billion, recording an increase of 29.18%.

Among the other principal contributors to gross income, fee and commission income grew by 32.21% to Rs 11.002 billion; net other operating income improved by 13.91% to Rs 7.808 billion assisted by higher exchange gains; net gains from de-recognition of financial assets contributed Rs 2.976 billion and net gains from trading amounted to Rs 2.037 billion, an increase of 171.95%. Net gains from de-recognition of financial assets witnessed a decline of 36.10% due to a reduction in profits from the sale of Treasury Bonds and Sovereign Bonds by Rs 1.417 billion, in comparison with the third quarter of last year, the Group said.

Total operating income at Rs 68.951 billion for the nine months, reflected a growth of 23.53% and the Group’s noteworthy achievement of restricting impairment charges to Rs 17.997 billion during the period under review, an increase of only 7.56% as compared with a 47.44% growth at the end of the first half of 2021, resulted in net operating income growing by 30.37% to Rs 50.954 billion. With the Group’s consistency in curtailing growth in operating expenses to 8.39% (8.42% for the first half of 2021), total operating expenses for the nine months increased by Rs 1.647 billion to Rs 21.280 billion.

Consequently, operating profit before VAT on financial services grew by a significant 52.55% to Rs 29.674 billion for the nine months, improving on the 41.09% growth recorded at the end of the first six months of the year.

Commercial Bank Chairman Justice K. Sripavan noted that these results demonstrate Commercial Bank’s strong ability to maintain healthy and balanced growth in core banking operations to mitigate the impacts of fluctuations in income from fee-based operations and other operating income. “Each quarter sees the Bank maintaining or improving on its key performance ratios to become even more financially stable and better-positioned to continue its mission as a systemically important bank,” he said.

The Bank’s Managing Director S. Renganathan elaborated that Commercial Bank continued to improve its CASA ratio, cost-income ratio, provisioning for impairment and provision cover in the period reviewed, disclosing that charges for impairment and other losses had in fact declined by a remarkable 41.87% in the third quarter. “These are excellent indicators of our unrelenting focus on banking fundamentals even as we continue to provide concessions to our customers in consideration of the difficult circumstances that prevail,” Renganathan said. “It is most noteworthy that in terms of profitability, the Group has also surpassed its 2020 full-year performance at the end of the third quarter of 2021 while improving its interest margins, return on assets and return on equity.”

The Group paid Rs 4.608 billion as value added tax on financial services for the nine months, which was up 50.55% in line with the growth in profits. As a result, profit before tax for the period amounted to Rs 25.067 billion, an improvement of 52.90%. Income tax increased by 15.92% to Rs 6.049 billion, the relatively lower rate attributable to the reduction in the income tax rate. Consequently, profit after tax for the nine months reviewed grew by 70.17% to Rs 19.017 billion. Notably, this is Rs 1.931 billion or 11.30% more than the Group’s net profit for the full year of 2020. Total taxes paid by the Group in respect of the nine months amounted to Rs 10.981 billion.

Taken separately, Commercial Bank of Ceylon PLC reported profit before tax of Rs 24.425 billion for the period, with a growth of 56.91% and profit after tax of Rs 18.606 billion, recording an improvement of 75.61%.

Total assets of the Group grew by Rs 200 billion or 11.35% over the nine months to reach Rs 1.962 trillion as at 30th September 2021.

Gross loans and advances increased by Rs 105.195 billion or 10.94% to Rs 1.067 trillion, recording a monthly average growth of Rs 11.688 billion over the nine months. The growth of the loan book over the preceding year was 12.36%.

Total deposits of the Group recorded an improvement of Rs 161.272 billion or 12.53% in the nine months reviewed at a monthly average of Rs 17.919 billion to reach Rs 1.448 trillion as at 30th September 2021. Deposit growth over the preceding 12 months was 18.51%.

In other key indicators, the Bank’s basic and diluted earnings per share improved by 54.72% from Rs 10.07 to Rs 15.58, while its net assets value per share increased to Rs 137.00 from Rs 134.67 as at end 2020.

The CASA ratio improved to an impressive 47.05%, an industry benchmark, from 42.72% at the end of 2020 and 41.97% at the end of the third quarter of 2020, while the Bank’s Cost to Income Ratio (CIR) before VAT on Financial Services improved to 30.73% at the end of the period under review from 33.95% at the end of 2020 and 38.51% at the end of 2019. The cost to income ratio inclusive of VAT on financial services improved to 37.55% from 39.96% at end 2020 and 49.41% at the end of 2019.

The Bank’s Tier 1 Capital Adequacy Ratio (CAR) stood at 12.182% as at 30th September 2021, and its Total Capital Ratio at 16.128%, 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 5.20% a year previously, while its net NPL ratio improved to 1.83% from 2.18% as at 31st December 2020 and 3.04% as at 30th September 2020. As a result, provision cover based on existing Central Bank of Sri Lanka (CBSL) regulatory requirements improved to 63.03% at the end of the reviewed nine months, from 57.42% at end 2020 and 41.47% a year previously. The Bank’s impaired loan (stage 3) ratio and impairment (stage 3) to stage 3 loans ratio as at 30th September 2021 stood at 6.83% and 31.92% respectively, compared to 6.78% and 30.87% respectively, at the end of 2020.

The Bank’s interest margin also improved to 3.37% from 3.17% for the year 2020, and 3.17% for the first nine months of the previous year. Return on assets (before taxes) and return on equity stood at 1.78% and 15.51% respectively for the nine months ending 30th September 2021 compared to 1.51% and 11.28% for 2020 and 1.37% and 10.28% at the end of the third quarter of 2020.

Sri Lanka’s first fully carbon neutral bank, the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for 11 years consecutively, Commercial Bank operates a network of 268 branches and 931 automated machines in Sri Lanka. The Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.



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Sri Lanka Tourism commands attention at World Routes 2021

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Sri Lanka made a huge splash at the 26th World Route Development Forum (World Routes 2021), which took place in Milan, Italy, recently. By making its presence felt at the forum, Sri Lanka pitched its destination for global airlines to consider it as one of the top holiday destinations for the upcoming winter season and beyond. Sri Lanka Tourism officials were able to directly engage with decision-makers from the global route development community, including world’s air services, while taking advantage of dedicated in-person and virtual event days combining extensive meeting opportunities, exclusive industry insight and first-class networking opportunities.

The Chairperson of Sri Lanka Tourism, Ms. Kimarli Fernando, expertly leveraged on the platform provided by World Routes 2021 to highlight Sri Lanka’s 5-year global campaign and growth potential. Her keynote presentation was followed by a panel discussion and a Q&A session with attendees in collaboration with Major General (Rtd.), G.A Chandrasiri , Chairman, Airport and Aviation Services. Through the duration of the Forum, Sri Lanka Tourism was present on all social media platforms for driving brand awareness, pushing Destination Sri Lanka to the front and centre of global travel and tourism operators present.

With the Sri Lankan Government declaring this a growth decade, Sri Lanka Tourism has been aligned to the government’s vision as enshrined in the 10 pillar strategy document. Over the last two years, Sri Lanka Tourism has advanced the industry across various factors to bring prosperity to all stakeholders and to ensure Sri Lanka tourism fulfills its potential. Concurrently, with a high vaccination rate, Sri Lanka has opened up to fully vaccinated tourists, offering them a safe and exciting stay.

One of the key pillars has been connectivity and the efforts made have been fruitful – with several European and regional airlines resuming direct flights, new routes being established and increased frequency of flights to Sri Lanka which will boost tourism for the upcoming peak season.

Apart from elaborating on the strategy, Kimarli Fernando engaged in an absorbing Q&A session with global airline industry stakeholders. During her keynote speech she elaborated on Sri Lanka’s biodiversity, UNESCO sites and other cultural and nature offerings. One of the highlights of her speech was tourist investment. Tourism has been attracting substantial investment despite the challenges emanating from the pandemic. Between March 2020 – June 2021, the Government of Sri Lanka has attracted over US$950 million in investments, received 64 project proposals and approved 38 projects to the value of $102.38 Million. These ventures will be executed under the Sri Lanka Tourism Development Authority (SLTDA). In order to attract strategic investors, the Investor Relations Unit was launched as a single point of contact for all tourism investments. In addition, the Government of Sri Lanka is extending a host of financial incentives and fast-track processes to get projects off the ground within the shortest possible time.

Given the recent tie-ups with France tourism operators and a similar push in more key western markets, the brand awareness of Sri Lanka is growing in strategic markets.

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ComBank wins Daraz award for ‘Best Engaging Overall Cards Base’

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The Commercial Bank of Ceylon was presented the award for ‘The Best Engaging Overall Cards Base’ at the recent ‘Payment Partner Performance Awards 2021’ of Daraz, South Asia’s premier online shopping marketplace.

The Bank was awarded this title for empowering the Daraz platform by generating the highest number of transactions by both credit and debit card bases and the highest number of unique buyers’ engagement during the financial year 2020-21. This is the second consecutive year that the Bank was honoured with this award.

The Commercial Bank of Ceylon has been an Internet Payment (IPG) service provider to Daraz from 2018, and has since partnered with the online retailer to power ‘Daraz 11.11,’ the world’s biggest online sale.

The two organisations are working together to offer diversified and unique offers to customers with a view of offering them attractive value additions, the Bank said. Commercial Bank cardholders can enjoy periodic discounts at Daraz with the offers structured by the Bank, and the convenience of Easy Payment Plans of up to 60 months.

Launched in 2012, the Daraz eCommerce site has an active presence in Pakistan, Bangladesh, Sri Lanka, Myanmar, and Nepal. The marketplace has over 2.5 million products in diverse categories such as consumer electronics, household goods, beauty, fashion, sports equipment, and groceries. It was acquired by the Alibaba Group in 2018.

Commercial Bank Credit and Debit Cards offer year-round promotions covering a wide variety of services. Commercial Bank was the first bank to offer loyalty rewards for both Credit and Debit Card holders under its Max Loyalty Rewards Points scheme. The Bank was also a pioneer in extending promotional discount offers which were traditionally only offered for Credit Cards to its Debit Cards.

Commercial Bank cards are the fastest growing cards in Sri Lanka and enjoy market leadership in Credit and Debit Card cumulative point-of-sale usage. The Bank offers a variety of Credit Cards in the Silver, Gold and Platinum tiers of Visa, Mastercard and UnionPay Cards, as well as Visa Signature, World Mastercard, Visa Infinite, UnionPay Asia Prestige Platinum and UnionPay Asia Prestige Diamond Cards in the premium segment. The cards are equipped with ‘Tap ’n Go’ NFC technology and are backed by a strong NFC Point-of-Sale (POS) network.

Sri Lanka’s first 100% carbon neutral bank, the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and the only Sri Lankan bank to be so listed for 11 years consecutively, Commercial Bank operates a network of 268 branches and 931 automated machines in Sri Lanka. Commercial Bank is the largest lender to Sri Lanka’s SME sector and is a leader in digital innovation in the country’s Banking sector. The Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Microfinance company in Nay Pyi Taw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.

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Banks’ Chief Internal Auditors’ Forum appoints new committee for 2021/22

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Seated from left - Varuna Koggalage (Committee Member), Numair Cassim (Vice President), Charitha Jayawickrama (President), Nirosha Perera (Secretary), Dulan Abeyratne (Committee Member) Standing from left - Dhanjaya Dayananda (Committee Member), Chandima Samarasinghe (Outgoing Secretary), John Premanath (Outgoing Vice President), Maduwantha Liyanage (Immediate Past President/Committee Member), Jayan Fernando (Committee Member). Absent from picture - Committee Members Kushlaini Allis and Gamini Jayaweera

The Chief Internal Auditors’ Forum of Banks appointed its 5th committee recently. The inaugural committee meeting was held on 17th November 2021 subsequent to the AGM held on 3rd November 2021. Charitha Jawawickrama of Sampath Bank was appointed as the President, Numair Cassim (Amana Bank) as Vice President and Nirosha Perera (Union Bank) as Secretary. Others in the committee include Varuna Koggalage (Seylan Bank), Dulan Abeyratne (HSBC), Dhanjaya Dayananda (SDB), Jayan Fernando (DFCC), Kushlaini Allis (NTB) and Gamini Jayaweera (NSB). The outgoing committee included Maduwantha Liyanage of BOC (Immediate Past President), John Premanath (Commercial Bank) and Chandima Samarasinghe (Cargills Bank).

The Forum was established to build strong relationships amongst the Licensed Commercial Banks and Licensed Specialized Banks in dealing with new developments and challenges pertinent to the industry. It also supports Internal Audit professionals to enhance comradeship and encourages participation of Banks to share knowledge and industry best practices. Since re-establishing in 2015, the forum has become an integral body that supports and assists Banks with regard to common audit related concerns in the industry.

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