In the first nine months of 2024, the Bank of Ceylon (BoC) skillfully navigated Sri Lanka’s complex economic terrain, a media release from the Bank stated.
Despite intense competition and global economic headwinds, the Bank achieved a Profit Before Tax (PBT) of Rs. 37.6 billion, a substantial 66% increase over the corresponding period in the previous year.
This exceptional performance highlights the Bank’s resilience and adaptability in the face of volatile market conditions and numerous challenges.
The General Manager /Chief Executive Officer, Russel Fonseka said, “Our robust financial results are a testament to the strength and stability we’ve demonstrated in this challenging economic climate. Moving forward, the Bank remains committed to expanding our service offerings,pioneering digital banking solutions, and solidifying our leadership position in Sri Lanka’s banking sector.”
The Bank successfully repriced its assets and liabilities, leading to a significant 85% increase in net interest income to Rs. 94.5 billion compared to Rs. 51.2 billion in the corresponding period of 2023. This growth underscores the Bank’s improved profitability, despite the challenging economic environment.
While interest income rose to Rs. 320.2 billion, interest expenses also increased to Rs. 225.7 billion. This strategic decision to offer competitive deposit rates was essential to retain and grow the Bank’s deposit base.
Net fee and commission income remained a strong contributor, reaching Rs. 15.1 billion, 17% YoY increase from Rs. 12.9 billion in the corresponding period of 2023. This growth was primarily driven by increased card-related transactions, retail banking services, and the rising adoption of digital banking channels.
Impairment charges amounted to Rs. 5.8 billion for loans and advances and Rs. 7.5 billion for other financial assets, reflecting challenges faced by sectors still recovering from economic downturns and global disruptions. Despite these provisions, the Bank’s stringent credit monitoring and the relative stabilisation of the Sri Lankan Rupee contributed to maintaining a solid financial standing.
However, the impaired loans (Stage 3) ratio increased to 5.80%, indicating potential external economic pressures. Nonetheless, the impairment coverage ratio (Stage 3 impairment provision to Stage 3 Loans) remains strong at 58.67%, demonstrating the Bank’s prudent risk management.
The Bank reported total operating income of Rs. 112.4 billion, a growth of 105%.
Operating expenses amounted to Rs. 48.9 billion, marking a 30% YoY increase, which was mainly due to increased personnel costs and other overhead expenses. Despite these higher expenses, the Bank effectively managed its operating costs, maintaining a cost-to-income ratio below 50%, consistent with previous quarter.
The Bank’s operating profit before taxes on financial services reached Rs. 50.2 billion, a remarkable 62% improvement over the previous year. After accounting for Value Added Tax (VAT) and the Social Security Contribution Levy (SSCL), the PBT stood at Rs. 37.6 billion, reflecting a 66% increase. Income tax expenses for the period amounted to Rs. 16.1 billion, resulting in a profit after tax of Rs. 21.5 billion. This robust performance in the face of significant challenges, highlights the Bank’s resilience and commitment to delivering sustainable profitability.
As of September 30, 2024, the Bank of Ceylon’s total assets reached Rs. 4,587.4 billion, a growth of 4%.
Gross loans and advances amounted to Rs. 2,324.9 billion as of September 30, 2024 despite a decrease of 5% in the loan book due to the Rupee appreciating by 8% and low credit demand. The Bank has considered the possible impacts from the Government’s Domestic Debt Restructing process too.
The Bank’s deposit base stood strong at Rs. 3,964.3 billion as of 30 September 2024 despite the appreciation of the LKR, showcasing sustained customer confidence and the Bank’s strategic focus on deposit mobilisation.
The Bank demonstrated strong financial performance across key metrics. The Return on Assets (ROA) before tax improved to 1.11% from 0.92% and the Return on Equity (ROE) after tax has improved to 11.08% from 10.55% in December 2023, reflecting the enhanced profitability from the Bank’s asset base. The interest margin also increased to 2.80% from 2.08% at the end of 2023, highlighting effective management of interest-earning assets and liabilities.
The Bank maintained robust capital adequacy, with a Common Equity Tier 1 ratio of 11.83% and a Total Capital Ratio of 15.50%, both above the Basel III requirements. Liquidity coverage ratios for both rupee and all currencies remained well above regulatory requirements, at 334.00% and 254.50%, respectively, ensuring the Bank’s capacity to meet obligations.
Bank of Ceylon Chairman, Kavinda de Zoysa said, “Together, we will uphold the Bank’s legacy, reinforcing its position as the largest financial institution in Sri Lanka, fulfilling our responsibility as Bankers to the Nation through customer service excellence, digital transformation, prudent risk management, strengthen governance and sustainable growth.”
