- Net reversal of Rs 62 Bn. in impairment provisions compensates for loss from sovereign bonds restructuring
- Further accelerates lending with loan book growth of Rs 230 Bn., with approximately half of growth coming in Q4
- Net interest income up 36.71% to Rs 118 Bn.
- Total taxes triple to Rs 62 Bn.
- PBT of Rs 98 Bn. and PAT of Rs 56 Bn.
The Commercial Bank of Ceylon Group, comprising of Sri Lanka’s largest private sector bank, its subsidiaries and an associate, in a filing of its annual financial statements with the Colombo Stock Exchange (CSE) has reported an exceptionally strong financial performance in 2024. Prudent provisioning for impairment charges and other losses, effective balance sheet management and strong lending growth helped mitigate a substantial loss materialised from the restructuring of the Sri Lanka International Sovereign Bonds (SLISBs) held by the Bank.
The Group recognised its full net loss of Rs 45.11 Bn., from the restructuring of SLISBs in the final quarter of the year, resulting in gross income for the 12 months ending 31st December 2024 reducing by 19.50% to Rs 274.98 Bn. However, a net impairment reversal of Rs 62.30 Bn., primarily due to provision reversals in respect of SLISBs, significantly cushioned the overall impact. Lower interest rates brought interest income down by 7.54% to Rs 275.22 Bn., further impacting the Group’s topline, the Group said.
Timely repricing of deposits and the strong CASA base of the Bank, resulted in total interest expenses reducing by 25.63% to Rs 157.08 Bn., enabling the Group to record a healthy growth of 36.71% in net interest income to Rs 118.13 Bn., compared to Rs 86.41 Bn. in 2023. In the meantime, net fee and commission income grew by 5.62% to Rs 23.65 Bn.
Notably, a decrease in net other operating income of Rs 12.19 Bn., or 58.93%, was largely offset by a reduction in losses from trading of Rs 10.28 Bn. or 82.37%.
Consequently, the Group’s net operating income surged by 103.61% to Rs 169.35 Bn. for the year under review, with Q4 alone contributing Rs 73.65 Bn., an increase of 227.25%. With operating expenses for the full year growing by a moderate rate of 17.04% to Rs 51.84 Bn., the Group reported an operating profit before taxes on financial services of Rs 117.52 Bn., an increase of 202.21% over the previous year.
Taxes on financial services increased by 297.20% to Rs 19.71 Bn., resulting in profit before income tax of Rs 97.81 Bn., for the 12 months, an improvement of 188.29% over the previous year. The income tax charge for the year increased by 250.22% to Rs 42.12 Bn., leading to a net profit after tax of Rs 55.69 Bn. for 2024, reflecting a growth of 154.28%.
Total tax charges of the Group for the year amounted to Rs 61.83 Bn., well over triple the Rs 16.99 Bn. tax charge in respect of the preceding year.
Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs 95.53 Bn., and a profit after tax of Rs 54.07 Bn. for the year reviewed, recording growths of 199.67% and 164.28%, respectively. Basic earnings per share rose to Rs 37.74, up from Rs 14.89 for 2023.
Commenting on these results, Commercial Bank Chairman Mr Sharhan Muhseen said: “While we appreciate that greater stability has been achieved in the country’s macroeconomic environment and that the restructuring of sovereign debt is a positive step, its final outcome is a substantial loss for most banks. In that context, our 2024 results highlight the value of Commercial Bank’s prudential approach to managing external challenges as well as its core banking obligations, and its ability to leverage on operational resilience in difficult times.”
Commercial Bank Managing Director/CEO Mr Sanath Manatunge noted that the Bank had in 2023 proactively increased its provision cover for possible losses from Sri Lanka International Sovereign Bonds from 35% to 52%, and further increased the cover to 54% in the second quarter of 2024, resulting in a cumulative impairment provision of Rs 92.86 Bn. on SLISBs up to the date of derecognition of these bonds. These measures helped the Bank mitigate the net losses sustained on the restructuring of these bonds.
Lending reached an all-time high in the final quarter of the year reviewed, during which the loan book grew by a noteworthy Rs 108.69 Bn. at a monthly average of Rs 36.23 Bn. This drove the gross loans and advances to Rs 1.53 Tn., an improvement of 17.73%. Deposit growth also accelerated, increasing by Rs 79.56 Bn. in Q4 alone at a monthly average of Rs 26.52 Bn., bringing the total deposits to Rs 2.31 Tn., with a YOY increase of 7.36%. As a result, total assets of the Group increased by Rs 220.39 Bn. over the 12 months to Rs 2.876 Tn. as at 31st December 2024, reflecting a healthy growth of 8.30%.
The CASA ratio of the Bank stood at 38.07% as at 31st December 2024, a marginal drop compared to 39.23% at end December 2023, but remains one of the best in the industry, the Bank said.
The Bank’s cost to income ratio excluding taxes on financial services stood at 48.88%, while the figure inclusive of taxes on financial services was 68.18% for 2024. Notably, these ratios improved to 33.85% and 41.89% respectively when the effect of the net loss on restructuring of SLISBs is discounted.
In terms of asset quality, the Bank’s impaired loans (Stage 3) ratio improved to 2.76% compared to 5.85% at end 2023, while its impairment (Stage 3) to Stage 3 loans ratio reached 64.61% from 43.22% a year ago, consequent to a decision to improve provision cover on a prudent basis.
Meanwhile, the Bank’s liquidity coverage ratio for the year reviewed stood at 529.20% for Rupees and 454.36% for all currencies, both more than four times the statutory minimum ratios of 100%. The Bank’s net stable funding ratio stood at 187.29% as at 31st December 2024, nearly double the minimum statutory requirement of 100%.
The Bank reported its Tier 1 and Total Capital Ratios at 14.227% and 18.142% respectively as at 31st December 2024, both comfortably above the regulatory minimum ratios of 10% and 14% respectively. The Bank’s net interest margin increased to 4.27% for the year under review compared to 3.32% reported for 2023. The Bank’s return on assets (before tax) improved to 3.56% from 1.27% for 2023 while the return on equity too improved to 22.06% for the year, from 9.78% for 2023.
Commercial Bank is the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and has the highest market capitalisation in the Banking Sector in the Colombo Stock Exchange (CSE). The Bank is the largest private sector lender, the largest lender to the SME sector, is a leader in digital innovation and is Sri Lanka’s first 100% carbon-neutral bank. Commercial Bank operates a strategically located network of branches and automated machines island-wide, and has the widest international footprint among Sri Lankan banks, with 20 outlets in Bangladesh, a fully-fledged Tier I Bank with a majority stake in the Maldives, and a Microfinance company in Myanmar. The Bank’s fully-owned subsidiary CBC Finance Ltd., also delivers a range of financial services via its own branch network.
