ComBank stays on growth trajectory in 2023 with notable Q4 performance

Accelerated lending sees loan book grow by Rs 56.8 billion in 3 months

Deposits surge by Rs 109.4 billion in final quarter

12-month gross income up 21.82% to Rs 341.6 billion

The Commercial Bank of Ceylon Group lent Rs 56.816 billion in the fourth quarter of 2023 at a monthly average of Rs 18.939 billion to end the year with a loan book of Rs 1.296 trillion, continuing its trend of strong lending growth in support of economic revival.

Robust deposit growth of Rs 109.408 billion was also witnessed in the three months ending 31st December 2023 at a monthly average of Rs 36.469 billion, demonstrating the Group’s strong deposit franchise and focus on financial intermediation in volatile macroeconomic conditions. Deposits grew by 8.60% YoY to Rs 2.148 trillion at the end of the review period.

The Group, comprising of Sri Lanka’s biggest private sector bank, its subsidiaries and an associate, reported in a filing with the Colombo Stock Exchange (CSE) that total assets increased by Rs 156 billion or 6.24% YoY and by Rs 130 billion or 5.15% in the three months reviewed to reach Rs 2.656 trillion as at 31st December 2023.

Gross income improved by 21.82% YoY and by 33.44% in the final quarter to total Rs 341.566 billion for 2023, and interest income grew by 33.84% to Rs 297.646 billion, the Group said. With interest expenses increasing at a higher rate of 53.37% over the year to Rs 211.231 billion, net interest income grew by a marginal 2.07% to Rs 86.415 billion. This was however, a welcome reversal of the negative growth recorded at the end of the preceding quarter, and was made possible by net interest income of Rs 25.534 billion in the fourth quarter, an improvement of 16.85%.

“We have consistently reinforced our balance sheet strength throughout the year and reaffirmed our position as the leading private sector bank,” Commercial Bank Chairman Prof. Ananda Jayawardane commented. “Our solid performance stands as a testament to our resilience and enduring dedication to serving our customers and stakeholders with distinction. We look forward to building upon this foundation of success and charting new heights of prosperity in the future.”

Commercial Bank Managing Director/CEO Sanath Manatunge noted that the Bank continued to demonstrate its unwavering strength and adaptability amidst a landscape of economic revival and reform. “As the country navigated through the aftermath of challenges flowing from the immediately preceding years, our focused strategy and commitment to stakeholder equity remained steadfast,” he said. “Embracing pivotal reforms and leveraging innovative approaches, we propelled forward, ensuring stability and sustainable value creation for all stakeholders. Our resilience and adaptability in the face of adversity is a testament to the dedication and resolve of the entire Commercial Bank team, whose unwavering commitment remains the cornerstone of our success.”

The Group reported a total operating income of Rs 122.070 billion for the 12 months ending 31st December 2023, a decline of 10.66% over the preceding year, but an improvement over the declines of 16.74% and 27.03% recorded at the end of the third and second quarters respectively. This improvement was attributed to total operating income for the fourth quarter growing by 8.60% to Rs 35.620 billion.

Net operating income for the 12 months, at Rs 83.175 billion reflected an improvement of 28.53%, with provisions for impairment charges and other losses for the year reducing by 45.92% to Rs 38.895 billion as a result of the previous year’s higher provisions on account of foreign currency denominated bonds and the impact of the depreciation of the Rupee on the value of those provisions. The Group’s impairment charges for the fourth quarter of 2023 amounted to Rs 13.113 billion, a reduction of 33.28% over the corresponding quarter of 2022.

Total operating expenses increased by 22.07% to Rs 44.290 billion for the 12 months and by 19.95% to Rs 12.314 billion for the fourth quarter, with personnel expenses (Rs 22.825 billion), depreciation and amortization (Rs 4.336 billion) and other expenses (Rs 17.129 billion) rising by 15.35%, 20.49% and 32.83% respectively, YoY.

Consequently, the Group posted an operating profit before taxes on financial services of Rs 38.885 billion for the full year, and Rs 10.193 billion for the fourth quarter, achieving improvements of 36.77% and 253.81% respectively, the latter due to the higher impairment provisions of the fourth quarter of the previous year.

Taxes on financial services increased by 26.52% to Rs 4.961 billion due to the introduction of Social Security Contribution Levy of 2.5% with effect from October 1, 2022, and the increase in value addition attributable to the supply of financial services in 2022. The Group posted an operating profit of Rs 33.924 billion after taxes on financial services, recording a growth of 38.41% over the preceding year.

The Group’s profit before income tax of Rs 33.927 billion for the 12 months recorded an improvement of 38.45%, in contrast to 13.56% at the end of the third quarter. With income tax for the 12 months increasing to Rs 12.027 billion, the Group reported a net profit of Rs 21.900 billion, a decline of 10.25% YoY.

Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs 31.880 billion for the 12 months, an improvement of 41.07% while profit after tax for the year reduced by 10.92% to Rs 20.461 billion.

(ComBank)