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.
Rating agency Moody’s has upgraded BOC’s Base Line Credit Assessment (BCA) to b1 from b2 in November 2014 in line with the improvement in capital base. Fitch Ratings has reaffirmed the international rating of Bank of Ceylon during the year as ‘BB-’ with a Stable Outlook which is on par with sovereign. Affirming the bank on the current rating floor has been mainly backed by the preferential Government support received by the bank. Fitch Ratings Lanka Ltd. has awarded ‘AA+ (lka)’ with Stable Outlook and another local rating agency ICRA Lanka Ltd. also has awarded (SL) ‘AAA’.
During 2014, BOC has been adjudged as being amongst the best at both local and international award ceremonies, adding more shine to the 75th anniversary celebrations. The winner of ‘Public Sector Banking Institution’ at SAFA Award 2013 and Gold award winner of ‘Financial Data – International Bank’ at ARC Awards are some of the main tokens of international recognition received by BOC.
In lieu of BOC’s well-spread branch network the bank was well recognised at the National Business Excellence Awards 2014 as winner of the ‘Excellence in Local Market Reach Category,’ Runner-Up of the ‘Banking Sector’ and Runner-Up of the ‘Excellence in Corporate Social Responsibility’.
Further, an unrivalled record has been reported by BOC becoming the only business to be the No.1 brand in the country for seven consecutive years as ranked by Brand Finance Lanka, a subsidiary of Brand Finance network (UK). Bank of Ceylon’s brand value has increased significantly to Rs.38 billion in 2015 compared to Rs.31 billion in 2014.
Further, the Bank has been able to maintain the number one position among Sri Lankan banks in top 1,000 world banks ranked by ‘The Banker’ magazine. Bank of Ceylon is also the first among all local banks to enter the ranks of top 1,000 banks.
The dedicated employee base of more than 8,000 people is one of the major assets of the bank and continuous development is in place focusing on the career progression of all employees. A new transformation process is being implemented to enhance the customer service and BOC will continue its sustainability activities addressing all needy segments in society as ‘Bankers to the Nation’.