Cargills Bank puts off listing deadline to June 2021 as pandemic upsets plans

• Lender initially planned to go public in early 2020
• Expects further rise in NPLs, downbeat earnings
• Hires external consultants to change course 

Cargills Bank Limited has deferred the timeline set for listing the company by more than a year to June 2021 as the bank doesn’t think the current atmosphere is appropriate to go public while dealing with its own issues such as higher non-performing loans and related challenges stemming from the pandemic. 

The licensed commercial bank of the Cargills group was earlier keen on listing the company early part of 2020, but the pandemic had upended the plans. 

The lender also had a challenging business and financial performance and recently gave a dourer outlook for the remainder of the year for both earnings and asset quality, as it was already reeling from sour loans even before the pandemic’s effects. 

“Following a challenging year for Cargills Bank, the listing deadline has been deferred to June 2021 and the capital raising to meet the bank’s enhanced regulatory requirements has been deferred to December 2022,” Cargills (Ceylon) PLC Chairman Louis Page said.

The bank’s interim results made public recently showed the downbeat financial performance for the quarter ended March 31, 2020 as it reported a loss of Rs.242.6 million compared to a loss of Rs.196.5 million a year ago.

The bank’s gross non-performing loan ratio was 13.78 percent by March-end, rising from 12.79 percent at the beginning of the year. 

The industry non-performing loan ratio was 5.1 percent by March-end, up from 4.7 percent at the start of the year.  The bank gave a dour outlook expecting further increase in the non-performing loans and downbeat earnings expectations coming from the debt moratorium and other relief granted by the Central Bank, affecting its interest income, the fee income and cash flows. 

The bank has recently sought the expertise of external consultants to change course and expedite the progress. “Presently, the management is being further strengthened by external consultants to fast-track the business model which will allow the bank to operate the way it was intended to,” Page stated.  

“Pushing ahead, I am cautiously optimistic about the bank’s future prospects,” he added.