DFCC Bank demonstrated resilience amid significant local economic disruptions.
The Bank strategically augmented profitability by optimising its investment portfolio, notably through increased holdings in high-yield government securities. These measures enabled the Bank to maintain profitability while providing much needed concessions to our valued customers during these challenging times.
The following commentary relates to the unaudited Financial Statements for the period ended December 31, 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 a Profit Before Tax (PBT) of Rs. 10,960 mn and a Profit After Tax (PAT) of Rs. 7,220 mn for the year ended 31 December 2023 compared with the previous year’s PBT of Rs. 2,439 mn and PAT Rs. 2,513 mn.
The Group recorded a PBT of Rs. 12,508 mn and PAT of Rs. 8,659 mn for the year ended December 31, 2023 as compared to Rs. 3,112 mn and Rs. 3,042 mn, respectively, in 2022. All the member entities of the Group made positive contributions to this performance. The Bank’s Return on Equity (ROE) improved to 12.19% during the year ended December 31, 2023. The Bank’s Return on Assets (ROA) before tax for the year ended December 31, 2023 was 1.82%. The Bank’s total tax expense, which includes Value Added Tax (VAT) and Social Security Contribution Levy (SSCL) on financial services and Income Tax is Rs. 6,927 mn for the year ended December 31, 2023. As a result, the Bank’s tax expense as a percentage of operating profit for the year stood at 48.96%.
DFCC declared a final dividend of Rs. 5.00 per share, consisting of Rs. 3.00 per share in cash and Rs. 2.00 per share in the form of a scrip dividend for 2023.
Net fee and commission income have increased by 36% to Rs. 3,905 mn for the year ended December 31, 2023.
The impaired loan (stage 3) ratio increased from 4.36% in December 2022 to 7.03% as of December 31, 2023, continuing the prevalent trend amid the present economic conditions.
Operating expenses for the year ended December 31, 2023 increased to Rs. 11,720 mn.
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 Rs. 7,016 mn was recorded on account of equity securities outstanding as at December 31, 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 Rs. 5,932 mn during the year.
The Bank’s deposit base experienced a growth of 9.97% during the year, recording an increase of Rs. 37 Bn to Rs. 407 Bn, up from Rs. 370 Bn as at 31 December 2022. This resulted in recording an improved loan-to-deposit ratio of 96.92%. Further, the CASA ratio was 23.79% as at December 31, 2023. The Bank’s funding costs were also contained using medium to long-term concessionary credit lines, primarily used to grow the lending portfolioand provide much needed concessionary funding to our customers. Considering these concessionary term borrowings, the CASA ratio further improved to 33.57%, and the loans-to-deposit ratio improved to 84.47% as at December 31, 2023.
DFCC Bank’s total equity increased to Rs. 68 Bn as at December 31, 2023.
Tier 1 and Total Capital ratios improved to 11.490% and 13.511%, by December 31, 2023, compared to 10.085% and 13.148%, as at December 31, 2022. The Bank’s Net Stable Funding Ratio (NSFR) was 124.60%, and Liquidity Coverage Ratio (LCR) – all currency – was 597.47% as at December 31, 2023, compared to 126.55% and 202.34%, as at 31 December 2022.
