ComBank ends tough 2020 with ‘platform for growth’

Strong asset and other income growth combined with an emphasis on prudent provisioning in one of the most challenging years on record, have enabled the Commercial Bank of Ceylon Group to end 2020 on a stable platform for growth, with better liquidity than most peers and adequate provision cover.

The Group, comprising of Sri Lanka’s benchmark private bank, its subsidiaries and an associate, has reported Gross income of Rs 151.966 billion for the year ending December 31, 2020, which although a marginal improvement over the preceding year, included net interest income of Rs 50.869 billion for the full year and Rs 14.073 billion for the last quarter alone, representing growths of 5.20% and 17.93% respectively.

This growth was attributed to interest expenses reducing by 9.53% to Rs 73.219 billion in a period when interest income declined by 4.02% to Rs 124.088 billion due to the reduction in interest rates and the modification losses incurred on interest concessions granted as pandemic relief to borrowers, that were recognised in the second quarter of the year. The Bank also achieved a creditable improvement to its CASA ratio from 37.10% to 42.72% helping to reduce interest expenses.

One of the noteworthy contributors to performance in the year under review was other income of Rs 16.039 billion, reflecting a growth of 86.97% from Rs 8.578 billion for 2019. This was made possible by net gains from trading improving by 38.01% to Rs 1.878 billion; a net gain of Rs 6.390 billion on derecognition of financial assets, which was an increase of 462.66% over the preceding year; and foreign exchange income growing by 27.87% to Rs 7.396 billion due to a 2.81% depreciation of the Rupee against the Dollar in the period under review, leading to net other operating income improving by 27.77% to Rs 7.771 billion.

Consequently, total operating income of the Group for the year grew by 13.36% to Rs 76.729 billion and by an impressive 17.61% to Rs 20.912 billion for the fourth quarter alone. The impairment charges and provisioning for other losses increased by Rs 10.088 billion or 89.03% YoY, taking impairment charges for the year to Rs 21.420 billion in consideration of certain identified risk-elevated sectors. (ComBank)