- Total Assets – exceeding Rs. 3.0 trillion a milestone reached (during 1Q -2021)
- Over Rs. 2.0 trillion Deposit and Loan base
Leaving behind an exceptional year, the Bank stepped into this year with a strategic move to leverage all unprecedent challenges. Preserving its market leadership Bank of Ceylon has delivered unrivaled performance during first half of this year while achieving another milestone by surpassing Rs. 3.0 trillion in its assets base.
Profit for the period
Mostly owing to loan growth and continuous credit monitoring efforts taken during 2021, the Bank reported Rs. 27.1 billion Profit Before Tax (PBT), which is four times with that of corresponding period of the previous year. Demonstrating its strength, agility and strategic approach in facing the challenges caused by the low interest rate scenario, higher Non-Performing Advances (NPA) due to the COVID hit economy and operational restrictions the Bank was able to increase both its fund-based and fee-based income during the year.
As a result of the loan growth of 28% gained last year, this year’s interest income went up by 12% to Rs. 121.9 billion and main contributive portfolios were overdraft, term loan, scheme loan and personal loan. In the meantime, interest expense declined by 9% to Rs. 70.4 billion in line with the increase in CASA ratio to 35% from 32% (1H-2020) and repricing the deposits at lower rates. The two-way movement in interest income and interest expense positively contributed to Net Interest Income (NII) of the Bank and NII has increased by 64% to Rs. 51.5 billion over that of 1H-2020. Non-fund-based income of the Bank grew by 61% YoY basis and the main contributors were fee and commission income and exchange income. Fee and Commission income received a boost with the operationalizing of business activities under new normal scenario. The key component of the fee and commission income, is the transactional banking related fee and commission income which showed a YoY growth of 28%. During the period under concern, the Sri Lankan Rupee depreciated by 8% resulting in an exchange gain of Rs. 6.5 billion.
Impairment charge for loans and advances for the period amounted to Rs. 13.0 billion bringing the loan to impairment provision reserve ratio to 6%. On YoY basis impairment charge decreased by 11% as incremental NPA during the 1H-2021 is lower than NPA increment compared to corresponding period of the previous year. NPA ratio stood at 4.7% against 5.4% reported by end June 2020. However, when calculating the impairment charge, the Bank always follows a very prudent approach; given the high degree of uncertainty and extraordinary circumstances in the short-term economic conditions mainly caused by the continuous disruptions to businesses the Bank made additional expected loss provision using management overlays on identified risk elevated industries and adjusting the economic factor reasonably and adequate enough to cover unseen risk factors in the uncertain and highly volatile environment.
The operating expenses of Rs. 18.8 billion consists of personnel cost, assets maintenance, deposit insurance and other overhead expenses. The Bank’s cost to income ratio of 31% shows the prudent and effective cost management mechanism adopted by the management.
During the period the Bank’s total assets grew by 11% and reached the Rs.3.3 trillion level preserving its industry leadership. The key contributive factor is growth in loans and investment book which denotes about 93% of the assets of the Bank. The Bank’s gross loan book surpassed the Rs. 2.0 trillion mark during the year 2020 and now stands at Rs. 2.5 trillion reporting 16% growth during 1H- 2021 mainly backed by growth in overdrafts, term loans and personal loans.
The Bank’s deposit base during the year has increased to Rs. 2.6 trillion. The Bank’s deposit base represents 35% of Current and Saving deposit (CASA) base which generates funds at low cost. The Bank’s Tier I Capital and Total Capital ratio stood at 11.5% and 15.0% respectively as of end June 2021 which were above the regulatory norms. Inspite of cash flow deferments in loan installments, the Bank was able to maintain better trade -off between the liquid assets and its liabilities. All liquid level monitoring ratios were well kept up.
Recognitions earned amidst challenges
Though having to operate in the face of many headwinds the Bank of Ceylon continues to be recognized locally and internationally and is the highest ranked local bank, and is among the Top 1000 Banks listed by the Banker Magazine UK for the year 2021. Locally the Bank was ranked among the Top 10 most Admired Companies of Sri Lanka by CIMA/ICCSL/ DailyFT.
Furthermore, the Bank of Ceylon was among the top 10 Corporates at the “Best Corporate Citizen Sustainability Awards 2020” conducted by the Ceylon Chamber of Commerce. Also, Bank of Ceylon has continued to be ranked as the most valuable Banking Brand for many consecutive years by the Brand Finance Lanka increasing its Brand Value by 13% over previous year. Fitch Ratings (SL) has assigned the credit rating of AA- (lka) to Bank of Ceylon and reaffirmed the same on Month of July 2021.
Continues to thrive with determined effort
BoC network consists of 646 branches (including limited service branches) and 1,370 ATMs, CRMs and CDMs across the country. During the period our ATM, CDM and CRM network has expanded by 42 more machines facilitating the growing demand for digital channels. Adopting to the new normalcy in the post COVID environment, we will be focusing more on expanding our digital and virtual delivery services and will continue to provide all our banking services with more strength and efficiency. Although, Sri Lanka has started to face the more severe third wave of COVID pandemic, the speeded-up vaccination campaign coupled with the adherence to health guidelines to curtail the spread of the virus, will allow the country to manage the third wave. Hence, we are optimistic and are looking for further economic revival and stability to come in future.
“Success is not final; failure is not fatal: it is the courage to continue that counts.” – Winston Churchill