Industry giant Bank of Ceylon has managed to improve its lending and deposits in the first quarter whilst profitability suffered due to heavy provisioning influenced by external factors, BoC sources said.
During the first quarter ended 31 March 2022, BOC’s total assets grew by 10% and reached Rs. 4.2 trillion, preserving its industry leadership.
The key contributor factor is growth in loans and the investment book which denotes about 92% of the assets of the Bank.
The gross loans and advances showed a marginal growth of 2% during 1Q-2022 and stood at Rs. 2.6 trillion due to low credit appetite in line with the sluggish movement in the economy.
The lending to the private sector grew by 7% during the period and the Bank continued to extend its support towards business revival.
Focusing more on maintaining the portfolio quality and with a view to addressing transforming of non-performing facilities in to hardcore level, the Bank setup a Business Revival unit during the last year and continued to support the revival of the customers.
The Bank maintains adequate coverage for the expected losses and the provision reserve built so far covers the 8% of the total loan book for expected losses.
The Bank’s deposit base during the year has increased to Rs. 3.1 trillion with a 9% growth and 72% of the deposit base comprises local currency deposits.
The balance 28% which denotes foreign currency deposits stood at Rs. 879.7 billion as of end March 2022. Current and Saving deposit (CASA) base which generates funds at low cost represents 34%.
BOC said 1Q was an exceptionally challenging period for the entire economy due to external sector pressure. Even though the disruptions to day-to-day operations caused by the COVID-19 were controlled at a satisfactory level, the adverse impact caused to the economy prevailed continuously.
However, during the 1Q-2022 the Bank recorded Rs. 8.9 billion Profit Before Tax down by 40% from a year ago and Profit After Tax (PAT) of Rs. 5.5 billion, down by 57%
The net interest income of Rs. 39.8 billion was reported with 68% growth contributing 52% to total operating income of the Bank. Interest income grew by 46% materialising the loans and investment growth reported in the previous year. Out of the total interest income of Rs. 85.3 billion, 67% was represented by the interest income from loans and advances and considerable contribution was delivered by income from Overdraft, Term loans and Retail loans.
The investment instruments which mainly comprises Government Treasury Bills, Bonds and other Foreign Currency Sovereign Bonds brought the major portion of interest income earned from the investment portfolio which stood at Rs. 27.9 billion.
Interest expenses increased by 30% to Rs. 45.5 billion in line with the increase in deposit base and re-pricing the deposits at higher rates immediately with the rate increase exercised in the beginning of the month of March 2022.
However , the upward rate shift started from the latter part of the 1Q-2022 will be reflected in the balance periods of the year