Cargills Bank Limited was able to cut losses in 2021, as the loans grew robustly while the asset quality and margins improved but the small-sized lender has still got more to do to return to black. 

The Cargills group’s licensed commercial bank reported a loss of Rs.277.1 million in the financial year ended on December 31, 2021, compared to a loss of Rs.743.9 million in the preceding year. 

The seven-year-old bank gave loans worth just under Rs.12 billion, recording a robust 37.7 percent growth in the financial year to Rs.43.7 billion, while the deposits grew by Rs.8.2 billion or 26 percent to Rs.40.2 billion. 

The Cargills Bank results come a bit late compared to the rest of the industry, as the bank is yet to seek a listing. 
The bank’s board and top executives were silent on listing plans after they deferred such plans in 2020, due to the unhealthy economic conditions prevailed at the time, due to the pandemic-related lockdowns. The lender put off its listing plans to June 2021 but perhaps, due to its losses, the senior management may have decided to again put off such plans until the bank returns to profitability. 

Both the bank’s chairman and chief executive officer didn’t comment on their listing plans in their 2021 annual statements published recently. 

However, CEO Senarath Bandara said that he is hopeful of a turnaround in the bank in the ongoing financial year.  
“We expect the positive growth momentum of the bank to continue and are confident in our ability to turnaround the performance of the bank in 2022,” he said in his annual operational review. 

The bank meanwhile reported a net interest income of Rs.1.84 billion in 2021, up 18 percent from the previous year. 

The bank improved its net interest margin to 3.97 percent, from 3.88 percent. 

Fee incomes nearly doubled to Rs.492.1 million, mostly due to the surge in debit and credit card incomes. 
Meanwhile, the bank set aside Rs.684.5 million for possible losses on loans and other financial assets in 2021, up 15 percent, from Rs.801.7 million in 2020. 

The bank also managed to bring down its extremely high gross non-performing loans ratio to 9.28 percent, from 14.42 percent in 2020. 

The bank still has nearly Rs.4.0 billion worth on non-performing loans in its books. 

Sri Lankan banks now fret over the rising interest rates and what they could mean for the progress made in NPLs last year, as the economy is hobbling and borrowers are coming off of years-long old payment holidays. 

The promoters of the bank, Cargills Ceylon PLC and CT Holdings PLC, together held a 65 percent stake in Cargills Bank while the Employees’ Provident Fund had a 4.98 percent stake being the third largest shareholder by December 31, 2021.