BOC concludes Rs.22.4bn PBT in 1H 2024

In 1H2024, Bank of Ceylon (BOC) navigated the challenging landscape of the Sri Lankan economy with a strategic foresight. 

Despite the heightened competition and global economic uncertainties, the bank delivered a profit before tax (PBT) of Rs.22.4 billion, a growth of 114 percent, compared to the previous year PBT of Rs.10.5 billion. 

During the first half of 2024, the bank achieved a PBT of Rs.22.4 billion. Demonstrating its ability to reprice its assets and liabilities in line with market condition, the net interest income rose significantly to Rs.57.5 billion, marking a 101 percent increase, compared to Rs.28.6 billion in the same period of 2023. The increase in interest income, which rose to Rs.213.1 billion, was partially offset by a rise in interest expenses, which totaled to Rs.155.6 billion. 

The net fee and commission income continued to be a robust contributor, amounting to Rs.9.9 billion, showcasing an impressive 14 percent year-on-year growth from Rs.8.7 billion in the first half of 2023. 

The impairment charges amounted to Rs.3.3 billion for loans and advances and Rs.4.6 billion for other financial assets.  However, the impaired loans (stage three) ratio increased to 5.68 percent, indicating potential external economic pressures. Nonetheless, the impairment coverage ratio (stage three impairment provision to stage three loans) remains strong at 58.85 percent, demonstrating the bank’s prudent risk management.

The bank reported a total operating income of Rs.68.7 billion, reflecting a significant growth of 163 percent compared to the previous year. 

The operating expenses amounted to Rs.30.8 billion, marking a 27 percent year-over-year increase, which was mainly due to personnel costs, depreciation, amortisation and other expenses also contributed to the overall increase in costs. Despite these higher expenses, the bank effectively managed its operating costs, maintaining a cost-to-income ratio below 50 percent, consistent with previous quarter. The bank’s operating profit before taxes on financial services reached Rs.30.1 billion, a remarkable 101 percent improvement over the previous year. After accounting for Value Added Tax and Social Security Contribution Levy, the PBT stood at Rs.22.4 billion, reflecting a 114 percent increase. The income tax expenses for the period amounted to Rs.9.9 billion, resulting in a profit after tax of Rs.12.5 billion. 

As of June 30, 2024, BOC’s total assets reached Rs.4,423.3 billion, reflecting a slight increase of 0.3 percent, from Rs.4,411.7 billion in December 2023. The increase in total assets was primarily driven by significant rises in investment in debt and other instruments and investment in securities purchased under resale agreement surged by Rs.114.0 billion. 

Gross loans and advances amounted to Rs.2.3 trillion as of June 30, 2024, although gross loan balance showed a decrease of 5 percent due to the Sri Lankan rupee appreciation by 5.6 percent and low credit demand. 

The bank’s deposit base stood strong at Rs.3.8 trillion as of June 30, 2024, showcasing sustained customer confidence and the bank’s strategic focus on deposit mobilisation. Amidst the appreciation of the Sri Lankan rupee, foreign currency deposits increased by US $ 14.0 million. The return on assets before tax improved to 1.02 percent, from 0.92 percent in December 2023, reflecting enhanced profitability from the bank’s asset base. While the return on equity saw a slight decline to 9.80 percent. The interest margin also increased to 2.60 percent, from 2.08 percent at the end of 2023, highlighting effective management of interest-earning assets and liabilities.

The bank maintained robust capital adequacy, with a common equity Tier 1 ratio of 10.85 percent and a total capital ratio of 14.91 percent, both above the Basel III requirements. Additionally, the liquidity coverage ratios for both rupee and all currencies remained well above regulatory requirements, at 329 percent and 249.51 percent.