DFCC Bank, the largest entity within the DFCC Group recorded an increase in Profit before tax and Profit after tax of 11% and 1% respectively compared to the previous corresponding period after adjusting for the exceptional gain from sale of Commercial Bank equity shares reported in the previous period, despite substantially higher impairment and taxation provisions.
However, the reported Profit before tax of LKR 3,792 million and a Profit after Tax of LKR 2,530 million reflects a decline of 13% and 26% respectively compared to the corresponding period in 2017 after the exceptional gain is accounted for.
The Group recorded a profit before tax of LKR 4,036 million and profit after tax of LKR 2,693 million for the nine months ended 30 September 2018 as compared to LKR 4,377 million and LKR 3,391 million respectively, in the comparative period in 2017.
The Bank recorded a healthy growth of 22% in Net Interest Income to LKR 10,020 million from LKR 8,228 million mainly as a result of the net portfolio growth of LKR 40,725 million in loans and receivables year-on-year and the prudent management of asset and liability re-pricing. The overall net interest margin (NIM) improved from 3.6% in 2017 to 3.8% by end of 3rd quarter of year 2018, based on the total assets of the Bank.
Further, a growth of 28% was recorded in fees and commission income to LKR 1,422 million from LKR 1,110 million in September 2017.
Total Operating Income increased to LKR 11,609 million compared to LKR 10,638 million in the comparative period.
DFCC Bank continued to penetrate the market by extending its branch network, conducting extensive business promotions including a new savings campaign, and by investing in innovative products and IT system modernisations that have contributed towards expanding delivery channels and improving service deliverables. The Bank has added seven-fledged branches to its branch network during the nine months’ period. This largely contributed to the increase in Operating Expenses to LKR 4,870 million from LKR 4,190 million (16%) in the comparable period.
The impairment provision during the period increased to LKR 1,898 million compared to LKR 1,017 million in the comparable period. However, recovery processes are being rigorously pursued to minimize any actual losses that may arise from such exposures.
The Bank’s NPL ratio moved up slightly to 3.26% as at 30 September 2018 from 3.14% recorded in June 2018 as a result of adverse environmental conditions that prevailed during this time. The ratio has however been managed at lower level than the industry average.