Bank of Ceylon reports Rs. 40.3 bn PBT in FY23

Bank of Ceylon (BOC) said it reported a Profit Before Tax (PBT) of Rs. 40.3 billion for the year ended 31 December 2023.

While the PAT was driven by a significant 15 percent increase in interest income, a sharp rise in interest expenses resulted due to lag effect in repricing as time deposits mobilised at higher rates.

Accordingly, net interest income decreased by 28 percent YoY. Moreover, net fee and commission income experienced a growth of 8 percent, primarily due to the increase in card transactions, improved remittance, and greater adoption of digital banking services in retail banking. The bank experienced approximately a 49 percent increase in worker remittances, accompanied by a rise in the number of remittances.

Under Expected Credit Loss model, the bank provided considerable level of impairment provision in previous years and by beginning of the year 2023, the bank had maintained provision coverage of 60 percent for stage 3 loans. The bank witnessed a net reversal of impairment provisions for loans and advances amounting to Rs. 2.7 billion during the year. By end 2023 too the same coverage ratio, i.e 60 percent coverage for stage 3 was maintained.  
Total operating expenses increased by 10 percent, mainly due to escalating other expenses in line with higher inflation. However, operating profit before taxes on financial services stood at Rs 53.0 billion, marking a notable improvement of 25 percent compared to the previous year. The bank incurred income tax expenses amounting to Rs. 13.7 billion for the year, resulting in a Profit After Tax of Rs. 26.7 billion.

Despite the challenges posed by the appreciation of the LKR and moving to a low-interest-rate scenario, the bank’s deposit base expanded by 16 percent to Rs. 3.9 trillion, indicating strong customer confidence. Total assets grew by 2 percent and reached to Rs. 4.4 trillion.

The bank achieved a Return on Assets (ROA) ratio of 0.92 percent and reported a Return on Equity (ROE) ratio of 10.55 percent. Notably, the bank maintained its Tier I Capital and Total Capital ratios at 12.76 percent and 15.84 percent, respectively as of end December 2023, exceeding regulatory requirements.

During the year, Fitch Ratings upgraded the Long Term Foreign Currency Issuer Default Rating (IDR) of the bank to ‘CC’ from ‘RD (Restricted Default)’ and Short Term IDR to ‘C’ from ‘RD’, the national rating of the Bank continued to rate at A(lka).