ComBank stays on growth trajectory in 2023 with notable 4Q performance

Group reported a total operating income of Rs.122.070 billion for the 12 months ending on December 31, 2023

In a statement highlighting its robust performance, Commercial Bank of Ceylon Group Chairman Prof. Ananda Jayawardane emphasised the institution’s commitment to maintaining balance sheet strength and its position as a key player in the private sector banking arena.

“Our solid performance stands as a testament to our resilience and enduring dedication to serving our customers and stakeholders with distinction. We look forward to building upon this foundation of success and charting new heights of prosperity in the future,” Prof. Jayawardane remarked.

Commercial Bank Managing Director/CEO Sanath Manatunge echoed similar sentiments, noting the bank’s unwavering strength and adaptability in navigating through economic challenges.

“As the country navigated through the aftermath of challenges flowing from the immediately preceding years, our focused strategy and commitment to stakeholder equity remained steadfast,” Manatunge stated.

“Our resilience and adaptability in the face of adversity is a testament to the dedication and resolve of the entire Commercial Bank team, whose unwavering commitment remains the cornerstone of our success.”
The group reported a total operating income of Rs.122.070 billion for the 12 months ending on December 31, 2023, a decline of 10.66 percent over the preceding year but an improvement over the declines of 16.74 percent and 27.03 percent recorded at the end of the third and second quarters, respectively. This improvement was attributed to the total operating income for the fourth quarter growing by 8.60 percent to Rs.35.620 billion.

The net operating income for the 12 months at Rs.83.175 billion reflected an improvement of 28.53 percent, with provisions for impairment charges and other losses for the year reducing by 45.92 percent to Rs.38.895 billion, as a result of the previous year’s higher provisions on account of foreign currency-denominated bonds and the impact of the depreciation of the rupee on the value of those provisions. The group’s impairment charges for the fourth quarter of 2023 amounted to Rs.13.113 billion, a reduction of 33.28 percent over the corresponding quarter of 2022.
Total operating expenses increased by 22.07 percent to Rs.44.290 billion for the 12 months and by 19.95 percent to Rs.12.314 billion for the fourth quarter, with personnel expenses (Rs.22.825 billion), depreciation and amortisation (Rs.4.336 billion) and other expenses (Rs.17.129 billion) rising by 15.35 percent, 20.49 percent and 32.83 percent, respectively, year-on-year (YoY).
Consequently, the group posted an operating profit before taxes on financial services of Rs.38.885 billion for the full year and Rs.10.193 billion for the fourth quarter, achieving improvements of 36.77 percent and 253.81 percent, respectively, the latter due to the higher impairment provisions of the fourth quarter of the previous year.
The taxes on financial services increased by 26.52 percent to Rs.4.961 billion, due to the introduction of the Social Security Contribution Levy of 2.5 percent, with effect from October 1, 2022 and the increase in value addition attributable to the supply of financial services in 2022. The group posted an operating profit of Rs.33.924 billion after taxes on financial services, recording a growth of 38.41 percent over the preceding year.
The group’s profit before income tax of Rs.33.927 billion for the 12 months recorded an improvement of 38.45 percent, in contrast to 13.56 percent at the end of the third quarter. With income tax for the 12 months increasing to Rs.12.027 billion, the group reported a net profit of Rs.21.900 billion, a decline of 10.25 percent YoY.
Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs.31.880 billion for the 12 months, an improvement of 41.07 percent while the profit after tax for the year reduced by 10.92 percent to Rs.20.461 billion.
In other performance indicators, the interest income as a percentage of gross income increased to 87.14 percent, from 79.32 percent for the preceding year, due to the growth of the loan book; the net interest income as a percentage of total operating income increased to 70.79 percent, from 61.96 percent a year previously and the net fee and commission income as a percentage of the total operating income increased to 18.34 percent, from 14.76 percent while the percentage of other income in the total operating income reduced to 10.87 percent, from 23.28 percent because the previous year’s other income included an exchange profit of Rs.35 billion, in contrast to an exchange loss of Rs.15 billion in 2023.
Consequently, the bank’s cost to income ratio before taxes on financial services stood at 36.11 percent for the 12 months under review, compared to 26.29 percent for 2022 and 31.61 percent for 2021, while the cost to income ratio inclusive of taxes on financial services stood at 40.31 percent, compared to 29.22 percent for 2022 and 37.97 percent for 2021.