Growth of 29%, highest-ever profit by a single entity in Sri Lanka
Bank of Ceylon closed its 75th year on a high note, by recording the highest-ever Profit Before Tax (PBT) in the bank’s history as well as in the Sri Lankan banking industry of Rs. 20.3 billion, achieving a growth of 29% compared to the previous year.
Post tax profit stood at Rs. 13.6 billion – a 12% growth. The Group has reported Rs. 21.4 billion PBT, recording a 33% growth over last year with the bank dominating the results of the Group accounting for 95% of earnings and 97% of the Group’s assets.
Despite the dip in interest margin due to the low interest rate regime, PBT was boosted by fee income, trading income and gains from financial investments. Fee income increased by 42% to Rs. 9.2 billion due mainly to the increase in export and import transactions and guarantees fees. Net gains from trading in Treasury Bills and dealing securities grew by 50% to Rs. 4.9 billion. Increase in these income bases shows the bank’s ability to find alternative income generating channels at difficult times.
Amidst the challenging operating environment which prevailed throughout most of the year, the bank’s assets grew by 11% to Rs. 1.3 trillion. The bank is the first domestic bank to achieve a trillion assets balance sheet and continues as the only bank to have done it so far.
BOC is the largest provider of finance to both Government and private sectors. Loans and advances account for 56% of the bank’s one trillion asset base and gross loans stood at Rs. 777.5 billion as at end 2014. The growth of the assets was also supported by the increase in financial investments and reverse repurchase agreements. Even though the asset growth is at a moderate level, BOC continues to secure its market leadership in terms of assets, advances, deposits, profits, NRFC deposits and inward remittances.
Deposits account for 74% of the bank’s liabilities as at the end of 2014. The total customer deposit base has grown from Rs. 842.1 billion in December 2013 to Rs. 934 billion as of end 2014 amidst interest rate margin pressure. This is an 11% growth and is in line with the industry growth rate which reflects the strong domestic franchise of the bank. The CASA ratio also has been improved to 43% from 38% resulting in a favourable deposit mix.
Return on Average Assets (ROAA) increased to 1.6% from 1.4%, reflecting the bank’s efficiency in asset and liability management. Return on Average Equity (ROAE) declined marginally from 22.2% to 20.5% due to Rs. 5 billion capital infusion made during the year.
The bank’s domestic liquid asset ratio was 30.8% as at end 2014 while the offshore liquid asset ratio was 25.9%. Both ratios have exceeded Central Bank’s required benchmark of 20%. The bank managed to maintain a better trade-off between liquidity and interest earning assets under an excess liquidity scenario.
Capital infusion of Rs. 5 billion and issue of Rs. 8 billion debentures improved Tier I and Tier II Capital Adequacy Ratios (CAR). These ratios stood at 9.5% and 13.6% respectively, showing an increase against 8.4% and 12.1% in 2013.
“It is evident that the bank made a strong progress on all fronts to make the highest-ever profit by a single entity in Sri Lanka. Currently we are in a transformation process which is gradually taking us to the position of a provider of fully-fledged digital banking to deliver to our customers best-in-class banking services with a novel experience. Our earnings benefit the nation directly. The Rs. 16.5 billion dividend the bank pays to the Government is used for development activities, bringing benefits to all the people of this country,” stated Bank of Ceylon Chairman Ronald C. Perera, President’s Counsel.