CEO Senarath Bandara
Cargills Bank’s results for the six months ended June 30, 2024 reflected a quarter-on-quarter (QoQ) decline in profitability.
Profit after tax at Rs. 137 Mn was lower by Rs. 116 Mn compared to the corresponding period of 2023. Net interest income of Rs. 1.65 Bn was a marginal decrease of Rs. 49 Mn in the six months compared with the corresponding period of 2023.
The marginal reduction in NIM was due to the gradual reduction in the interest rates and market volatility. The Bank continued to focus on repricing of deposits and advances reflecting the market situation and managing the NIM in an optimal manner.
Net fee and commission income of Rs. 384 Mn for the first half of 2024 was lower than the Rs. 408 Mn recorded in the previous year. The decrease of 6% was largely due to downward revision of tariffs in relation to trade operations and reduced net income from card-related services.
Net gains from financial assets at fair value through profit or loss grew by Rs. 83 Mn to reach Rs. 180 Mn in IH 2024. Capital gains realised on derecognition of financial assets boosted other income streams by Rs. 249 Mnin the period under review to reach Rs. 278 Mn.
Total operating expenses increased by 18% from Rs. 1.35 Bn last year to Rs. 1.59 Bn. Personnel expenses increased by 23% largely due to adjustments to salary and welfare benefits considering increased costs of living and market conditions.
Other operating expenses grew by 17% mainly fromthe increased cost of utilities and the cost of repair and maintenance of IT assets.
Impairment charges totaling Rs. 440 Mn reflected a marginal reduction of 1% from Rs. 446 Mn in the first six months of 2023 evidencing a focused and proactive management of delinquencies.
Additional impairment overlays considered necessary have been incorporated after a careful scrutiny of the status of borrowers. The Bank’s Stage 3 Loans (net of Stage 3 Impairment) to Total Loans Ratio stood at 9.92% while Stage 3 Provision Cover was 46.15% as at June 30, 2024.
The Bank maintains Capital Adequacy and Liquid Assets Ratios well within the minimum requirements prescribed by the Central Bank. The total Capital Adequacy Ratio was 21.71% while all liquidity related ratios were well above the regulatory minimum.
Total assets of the Bank as at June 30 stood at Rs. 72.8 Bn, an increase of 4% or Rs. 3.1 Bnin the first six months of the year. The loan book registered a moderate growth, from Rs. 40.6 Bn to Rs. 41.1 Bn, given conditions prevailing. Financial Assets measured at fair value through other comprehensive income grew by 5% to reach Rs. 18.7 Bn. Negative gain of Rs. 14 Mn was reflected in Other Comprehensive Income. Customer Deposits grew by 3% to Rs. 52.2 Bn at the reporting date from Rs. 50.7 Bn at the end of 2023 amidst continued reductions in market interest rates.
Richard Ebell who served onthe Bank’s Board as Chairman retired on July 2, 2024 in compliance with the Banking Act on Corporate Governance for licensed commercial banks issued by the Monetary Board of the Central Bank. Ebell completed nine years in the Bank Board having been appointed in 2015. Asoka Pieris, who served as Deputy Chairman was appointed as the Chairman of the Bank, from July 3, 2024.
