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Commercial Bank former Chairman Dharma Dheerasinghe, incumbent Chairman Justice K. Sripavan, and MD S. Renganathan[/caption]
The Commercial Bank Group, comprising a private bank, its subsidiaries, and an associate, reported gross income of Rs. 151.966 billion for the year ended 31 December 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 growth rates 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, which were recognised in the second quarter of the year.
Profit before income tax recorded an improvement of 6.68% over the previous year to Rs. 24.520 billion for 2020. Significantly, profit before tax for the fourth quarter alone was up by an impressive 30.25% to Rs. 8.126 billion. The group’s income tax charge for the year, at Rs. 7.433 billion, reflected an increase of 33.60%, principally because the previous year’s income tax computation was reduced by an exemption granted on the interest income from Sri Lanka development bonds (SLDBs).
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 US 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.
As a result, net operating income declined by 1.85% to Rs. 55.310 billion, but the group’s success in reducing operating expenses marginally to Rs. 26.263 billion enabled it to post operating profit of Rs. 29.047 billion before taxes on financial services for the year, limiting the YoY decline to 3.91%. Notably, operating profit before taxes on financial services for the final quarter amounted to Rs. 9.595 billion, reflecting a growth of 19.66%.
Commenting on the year’s results, Dharma Dheerasinghe, who served as Chairman of the bank till his retirement in December 2020, said: “The Covid-19 pandemic exerted a multidimensional impact on our performance, which will continue to be reflected in some indicators in the years ahead, but I am confident that we have ended 2020 in good shape to achieve growth, while providing adequate support to our customers and the national economy.”
Commercial Bank Chairman Justice K. Sripavan, who commenced his term in December 2020, said the bank had on careful analysis, taken a decision to set aside one of the highest amounts in the industry in terms of provisioning for impairment charges to ensure that it would have a cushion against the continuing effects of the pandemic on several sectors of business.
Commercial Bank Managing Director (MD) S. Renganathan disclosed that steps taken to make forward-looking risk-based provisions as a prudential measure increased the bank’s provision cover from 39.39% at end 2019 to 57.42% at the end of the year under review, based on the Central Bank’s provisioning criteria.
Commercial Bank former Chairman Dharma Dheerasinghe, incumbent Chairman Justice K. Sripavan, and MD S. Renganathan[/caption]
The Commercial Bank Group, comprising a private bank, its subsidiaries, and an associate, reported gross income of Rs. 151.966 billion for the year ended 31 December 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 growth rates 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, which were recognised in the second quarter of the year.
Profit before income tax recorded an improvement of 6.68% over the previous year to Rs. 24.520 billion for 2020. Significantly, profit before tax for the fourth quarter alone was up by an impressive 30.25% to Rs. 8.126 billion. The group’s income tax charge for the year, at Rs. 7.433 billion, reflected an increase of 33.60%, principally because the previous year’s income tax computation was reduced by an exemption granted on the interest income from Sri Lanka development bonds (SLDBs).
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 US 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.
As a result, net operating income declined by 1.85% to Rs. 55.310 billion, but the group’s success in reducing operating expenses marginally to Rs. 26.263 billion enabled it to post operating profit of Rs. 29.047 billion before taxes on financial services for the year, limiting the YoY decline to 3.91%. Notably, operating profit before taxes on financial services for the final quarter amounted to Rs. 9.595 billion, reflecting a growth of 19.66%.
Commenting on the year’s results, Dharma Dheerasinghe, who served as Chairman of the bank till his retirement in December 2020, said: “The Covid-19 pandemic exerted a multidimensional impact on our performance, which will continue to be reflected in some indicators in the years ahead, but I am confident that we have ended 2020 in good shape to achieve growth, while providing adequate support to our customers and the national economy.”
Commercial Bank Chairman Justice K. Sripavan, who commenced his term in December 2020, said the bank had on careful analysis, taken a decision to set aside one of the highest amounts in the industry in terms of provisioning for impairment charges to ensure that it would have a cushion against the continuing effects of the pandemic on several sectors of business.
Commercial Bank Managing Director (MD) S. Renganathan disclosed that steps taken to make forward-looking risk-based provisions as a prudential measure increased the bank’s provision cover from 39.39% at end 2019 to 57.42% at the end of the year under review, based on the Central Bank’s provisioning criteria.