From left: BOC Chief Financial Officer Russel Fonseka, Chairman Kanchana Ratwatte and General Manager D.P.K. Gunasekera
Pic by Kithsiri De Mel 

• Crosses Rs.3tn asset mark in first quarter of 2021
• Records Rs.23.6bn PBT for 2020—highest in industry 
• Loan book expands record 28% to cross Rs.2tn mark
• Deposit base expands 23% growth to Rs.2.5tn

State-owned banking giant Bank of Ceylon (BOC) has crossed the Rs.3 trillion milestone in total assets, becoming the first Sri Lankan bank to achieve such a feat and cementing its undisputed leadership position in Sri Lanka’s financial sector.

The bank has achieved this milestone in the first quarter of this year, as it closed the financial year 2020 just a fraction away from the Rs.3 trillion mark, BOC Chief Financial Officer Russel Fonseka told reporters in Colombo, during a press conference held to announce the bank’s financial performance for the year 2020, yesterday. Presenting the bank’s audited accounts, BOC Chairman Kanchana Ratwatte and the senior management of the bank headed by General Manager D.K.P. Gunasekera, claimed that the state-owned banking giant has reported the highest profit for any banking institution in the country, despite the unprecedented challenges brought in by the
COVID-19 pandemic. 

BOC said it reported an operating profit of Rs.29 billion for the year under review and a pre-tax profit of Rs.23.6 billion. The after-tax profit of the bank was Rs.17.8 billion. 

Although 2020 profit figures were lower than the 2019 figures, as a result of the challenging operating conditions due to the pandemic, the bank saw its asset base growing by sharp 24 percent to Rs.2.98 trillion as at December 31,2020, backed by a robust 28 percent increase in the loan book to Rs.2.1 trillion. 

“Both government and private sector lending contributed to the growth during the year, while working capital and personal lending showed a boost in all segments, including retail and corporate financing,” BOC said in a statement issued to media.

The bank’s deposit base, which accounts for more than 23 percent of the industry, increased by 23 percent during the year under review to Rs.2.5 trillion, of which the current and saving deposits (CASA), which generate low-cost funds, accounted for 35 percent. 

However, the bank had to provide substantially higher impairments on possible bad loans in 2020, irrespective of the concessions given to customers by way of cash flow deferments and other relief packages. 

The impairment charges amounted to Rs.31.2 billion in 2020, compared to Rs.22 billion in 2024. However, the bank was able to manage the well-known assets quality indicator, NPA ratio at the same level of 4.8 percent by end-December 2020 in comparison to the previous year.

Meanwhile, BOC’s Tier 1 Capital and Total Capital ratio stood at 11.2 percent and 14.9 percent, respectively by end-2020, which were above regulatory norms. The bank, during 2020, successfully executed issuance of its first Additional Tier 1 (ATI) bond, generating Rs.15 billion ATI capital.   

The bank also secured a funding line of US $ 140 million from China Development Bank during 2020, of which only US $ 70 million was drawn during the year and the balance is expected to be drawn this year, depending on the bank’s foreign currency requirements. Meanwhile, as a state-owned bank, BOC extended its support to the government by implementing the Central Bank-announced moratorium to over 258,000 customers in facilities with Rs.589.4 billion. BOC also topped the industry in granting loans under the ‘Saubagya’ working capital loan scheme by disbursing Rs.39.1 billion to over 18,000 borrowers. Further, the bank disbursed Rs.128.9 billion to the SME and microfinance sector during 2020, aptly understanding its duty in developing a strong national economy.  Meanwhile, BOC Chairman Ratwatte said the bank is looking at setting up a Rs.10 billion venture capital fund to support export-oriented companies and start-ups with equity capital in line with the government’s policy of creating a strong industrial and manufacturing base for the country. 

“Currently we are in the approval process. Within a month we should be able to set it up,” he said. In another new initiative, BOC has also set up a recovery and business revival unit under a Deputy General Manager to support customers whose businesses were badly hit by the pandemic. This unit is currently supporting more than 40 large-scale businesses and nine businesses have already been resurrected by disbursing over Rs.25 billion worth of facilities. 

BOC maintains a positive financial outlook for this year, specially expecting higher income from the record loan growth achieved last year, in the backdrop of improved economic activities with the dissipating of pandemic’s impact on the local as well as global economy.