Sri Lanka’s ComBank loan book exceeds Rs. 1.3 trillion by end of Q1 2024
The Morning: The Commercial Bank of Ceylon Group has ended the first quarter of 2024 with a loan book of Rs 1.316 trillion, continuing the Bank’s focus on lending in a period where the appreciation of the Rupee negatively impacted the value of the loan book and resulted in a contraction of the balance sheet.
The Group reported a net increase of Rs. 20 billion in its loan book in the first three months of the year and Rs. 129 billion in the 12 months ending 31 March 2024, averaging Rs. 10.75 billion per month and achieving y-o-y growth of 10.87% in gross loans and advances.
Comprising of Sri Lanka’s biggest private sector bank, its subsidiaries and an associate, the Group reported in a filing with the Colombo Stock Exchange (CSE) that the value of deposits declined by a marginal 0.33% to Rs. 2.141 trillion in the first quarter of 2024 largely due to the appreciation of Rupee against the Dollar, but had grown by Rs. 117 billion or 5.80% over 12 months. However, the total Rupee deposits of the Group recorded a growth of Rs. 41.256 billion or 2.94% during the first quarter of 2024.
Total assets stood at Rs. 2.616 trillion as at 31 March 2024, a decrease of 1.48% consequent to a revaluation of the Group’s assets in foreign currency in line with the appreciation of the Rupee in the period under review.
The Group posted gross income of Rs. 80.208 billion for the quarter under review, down 4.68% over the corresponding period of 2023 primarily due to a decrease in interest income to Rs. 70.391 billion, which reflected a y-o-y decline of 7.31% due to the considerable reduction in market interest rates on loans and government securities.
However, a noteworthy improvement of over 3% in the CASA ratio of the bank from 37.08% a year ago to 40.51% as at 31 March 2024 coupled with a repricing of deposits in keeping with market movements, saw interest expenses reducing by 25.05% to Rs. 42.693 billion for the quarter under review. Consequently, net interest income for the three months improved by 45.97% to Rs. 27.698 billion, the Group said.
“Factors such as the strengthening of the Rupee and changes in impairment provisioning, necessitated by the dynamics of the country’s macroeconomic situation, continue to impact key indicators more than usual,” Commercial Bank’s newly-appointed Chairperson Sharhan Muhseen said: “Our first quarter figures reflect well on the Bank’s and the Group’s ability to keep our focus on identified priority areas to generate equitable results for all stakeholders.”
Commercial Bank Managing Director/CEO Sanath Manatunge added: “Our first quarter performance illustrates the results of strategies implemented to align the Bank’s portfolios towards improving the contribution from fund-based operations, which helped us to record a noteworthy improvement in our bottom line. Consequently, key operational indicators and performance ratios continue to be impressive, and we are confident that we will continue to build on our role as a domestic systemically important bank.”
OSL take:
The increase in loans recorded by Sri Lanka’s Commercial Bank is indicative of the ongoing economic activities in the country. Sri Lanka’s banking sector has shown great strength and resilience during the recent economic crisis faced by the country and is now on the path to return to normalcy. A strong banking sector is a prerequisite for a country on the growth path attracting foreign businesses/investors while targeting on becoming a regional hub. Sri Lanka’s strong and resilient banking sector is definitely a tick-off the check list of foreign businesses/investors exploring business/investment opportunities in the country. Given the country’s expanding economy supported by Sri strategic positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed with other countries along with the many incentive schemes presented by the Sri Lankan government to foreign businesses/investors all make Sri Lanka an attractive business destination for foreign businesses/investors exploring business/investment opportunities in Sri Lanka. The country’s growing business potential is an added attraction for foreign businesses.