Commercial Bank of Ceylon PLC has made a robust start to 2017, reporting solid income and profit growth for the three months ending 31st March 2017 and weathering a further reduction in margins and a substantial increase in taxation.
The Bank reported profit of Rs 6.341 billion before VAT and NBT, reflecting growth of 17.93% over the first quarter of 2016, while VAT and NBT for the three months reviewed increased by 40.33% to Rs 1.119 billion due to an increase in the VAT rate and the higher profits earned during the period under review.
Consequently, profit before income tax for the quarter grew by lower percentage of 14.03% to Rs 5.222 billion, while profit after tax, at Rs 3.775 billion, increased by 16.73%.
Overall, the Bank paid Rs 2.565 billion in taxes for the three months under review, an increase of 19.73% over the corresponding quarter of the previous year, which, coupled with the increased cost of funds this year, resulted in shrinking margins.
“We have learned to live with the reality of reduced margins and higher taxes, through our strong focus on operational excellence which continues to boost business volumes,” Commercial Bank chairman Dharma Dheerasinghe said, commenting on the figures released by the Bank to the Colombo Stock Exchange (CSE). “The Bank’s momentum in mobilising funds and lending has not slowed, even though the dynamics that apply to these areas are changing.”
Commercial Bank Managing Director Jegan Durairatnam said that although the Bank’s Current and Savings Account (CASA) base had remained almost at the same levels, the new deposits mobilised cost significantly higher than those mobilised in the corresponding quarter of 2016. “The ability of the Bank to maintain its growth in this scenario reaffirms the emphasis we place on holistic management of our core business areas,” he said.