By: Staff Writer
February 28, Colombo (LNW): Bank of Ceylon (BOC) has reported impressive financial results for 2024, demonstrating resilience and strategic adaptability. The bank saw substantial growth in key financial indicators, including assets, deposits, and profitability, despite economic challenges and market fluctuations.
BOC’s General Manager/CEO, Russel Fonseka, highlighted the bank’s strength and stability in a challenging economic climate, emphasizing its commitment to expanding services, driving digital banking solutions, and maintaining its leadership in Sri Lanka’s banking sector. Chairman Kavinda de Zoysa reaffirmed BOC’s commitment to sustainable growth, risk management, and strong governance, reinforcing its status as the country’s largest financial institution.
Financial Performance and Profitability
BOC demonstrated its financial resilience by strategically adjusting its assets and liabilities, resulting in an 84% increase in net interest income to Rs. 167.6 billion from Rs. 91.2 billion in 2023. Although interest income declined by 12% due to a relaxed monetary policy, the 32% reduction in interest expenses helped bolster net interest income, underscoring improved profitability.
Net fee and commission income rose 17% year-over-year (YoY) to Rs. 20.6 billion, driven by increased card transactions, retail banking services, and digital banking adoption. Trading activities contributed Rs. 3.4 billion in net gains, highlighting the bank’s strong market strategies despite exchange losses due to LKR appreciation.
BOC took proactive measures to mitigate credit risks, implementing targeted management overlays to address sectoral vulnerabilities. Despite recording an impairment charge of Rs. 12.4 billion for loans and advances, a net reversal of Rs. 32.8 billion was recognized following debt restructuring. However, ISB restructuring resulted in a net impact of Rs. 14.1 billion on the bank’s profits.
Operational Efficiency and Growth
Total operating income surged 81% to Rs. 182.0 billion, driven by improvements across all income streams. Operating expenses rose by 28% to Rs. 67.1 billion, primarily due to a 35% increase in personnel costs and 21% higher overhead expenses. Despite this, the cost-to-income ratio improved to 40%, reflecting enhanced efficiency.
BOC’s operating profit before taxes on financial services soared by 155% to Rs. 135.3 billion. After taxes, profit before tax (PBT) stood at Rs. 106.9 billion, marking a 165% increase from 2023. The bank contributed significantly to the national economy, paying Rs. 70.9 billion in taxes, leading to an effective tax rate of 52% and a net profit of Rs. 64.4 billion.
Strengthening Assets and Deposits
As of December 31, 2024, BOC’s total assets reached Rs. 4,985.1 billion, with the group’s assets totaling Rs. 5,048.7 billion, a 13% YoY growth. The bank’s deposits grew 8% to Rs. 4,208.6 billion, reflecting strong customer confidence. Despite a 1% drop in gross loans to Rs. 2,436.2 billion due to LKR appreciation and subdued credit demand, the bank remained well-positioned for future growth.
The bank also raised Rs. 15.0 billion through Basel III-compliant Tier II capital issuance to strengthen its capital base. Key financial ratios showcased improved performance, with Return on Assets (ROA) before tax increasing to 2.28% from 0.92% and Return on Equity (ROE) after tax rising to 23.23% from 10.55%. The bank maintained a strong capital adequacy position with a Common Equity Tier 1 ratio of 11.97% and a Total Capital Ratio of 16.55%, well above regulatory requirements.
Social Impact and Recognition
BOC continued to support economic development through various initiatives. The ‘BOC Youth Loan Scheme’ facilitated employment and innovation, while the ‘BOC Ranliya Loan Scheme’ empowered women entrepreneurs with loans up to Rs. 100 million. Other initiatives focused on MSMEs, rural development, and financial inclusion, particularly through digital banking services for vulnerable groups.
Additionally, BOC partnered with Sri Lanka Post to expand financial services across underserved communities. These efforts contributed to the bank being named ‘Bank of the Year Sri Lanka 2024’ by The Banker magazine and securing a position in the Top 1,000 World Banks list.
Future Outlook
As Sri Lanka’s largest financial institution, BOC remains committed to leveraging technology, driving economic stability, and fostering sustainable growth. With a focus on enhancing customer experiences and strengthening governance, the bank is strategically positioned to navigate evolving economic conditions while maintaining its leadership in the financial sector.
