ComBank ends Q1 as first private sector banking group on the cusp of Rs 3 Tn. assets milestone

• Loan book grows by Rs 116.75 Bn. in 3 months to Rs 1.642 Tn.

• Net interest income up 23.53% to Rs 34.21 Bn.

• Improves provision cover and interest margin alongside balance sheet growth  

• Reports 3-month PBT of Rs 22.56 Bn. and PAT of Rs 14.97 Bn., with taxes amounting to Rs. 11.61 Bn.

The Commercial Bank of Ceylon Group has made a characteristically strong start to 2025, recording healthy profit and balance sheet growth in the first quarter of the year.

Comprising of Sri Lanka’s largest private sector bank, its subsidiaries and an associate, the Group reported in a filing with the Colombo Stock Exchange (CSE) that assets reached Rs 2.999 trillion as at 31st March 2025.

Gross income for the quarter grew by 9.85% to Rs 88.10 billion, while interest income improved by 3.14% to Rs 72.60 billion. Interest expenses reduced by 10.09% to Rs 38.38 billion as a result of repricing of liabilities amidst the lower rates regime that prevailed, generating a 23.53% growth in net interest income, which amounted to Rs 34.21 billion for the three months reviewed.

Total operating income grew by 33.40% to Rs 46.62 billion, but the Group’s provision for impairment charges and other losses was increased by 110.44% to Rs 7.23 billion with additional provisions made on a prudential basis for individually-significant customers, which resulted in an improvement in the Bank’s impaired loans (Stage 3) ratio.

Consequently, net operating income for the three months, at Rs 39.39 billion, reflected a growth of 25.00%, while the Group’s ability to keep operating expenses down to Rs 12.80 billion, an increase of just 6.20%, resulted in operating profit before taxes on financial services improving by 36.64% to Rs 26.59 billion.

Taxes on financial services increased by 48.18% to Rs 4.03 billion resulting in Group profit before tax of Rs 22.56 billion for the three months, an improvement of 34.77%.  With income tax increasing by 27.92% to Rs 7.58 billion, the Group reported net profit of Rs 14.97 billion for the quarter reviewed, reflecting bottom line growth of 38.52%.

Taken separately, Commercial Bank of Ceylon PLC reported a profit before tax of Rs 21.88 billion and profit after tax of Rs 14.50 billion for the three months, posting growths of 35.10% and 38.71%, respectively.

Commenting on these results, Commercial Bank Chairman Mr Sharhan Muhseen said: “The Group has performed exceptionally well in the first quarter of the year, and it’s not just in terms of business volumes. While nearing the milestone of Rs 3 trillion in assets – a first for a private sector banking group – is a significant achievement, it is equally noteworthy that the Bank’s impaired loans (stage 3) ratio has declined and  net interest margin has improved in tandem with balance sheet growth.”

Commercial Bank Managing Director/CEO Mr Sanath Manatunge noted that the Group had achieved substantial growth in its loan book in the first quarter, continuing the trend of 2024; had reversed a net loss of Rs 1.9 billion on trading incurred in the corresponding quarter of the previous year; nearly tripled net other operating income, and continued to maintain the best CASA ratio despite greater demand for fixed deposits. “These demonstrate our attention to diverse aspects of our business, all of which have contributed to our robust first quarter results, while building resilience for future growth,” he said.

Total assets of the Group increased by Rs 122.85 billion or 4.27% over the three months under review to reach Rs 2.999 trillion as at 31st March 2025. The Group ended the quarter with gross loans and advances of Rs 1.642 trillion, a growth of Rs 116.75 billion or 7.65% over three months, at a monthly average of Rs 38.92 billion. Loan book growth over the preceding 12 months was Rs 326.02 billion, with YoY growth of 24.77%, averaging Rs 27.17 billion per month. 

Meanwhile, deposits grew by Rs 105.82 billion or 4.59% to Rs 2.412 trillion in the three months reviewed, reflecting average monthly growth of Rs 35.27 billion, and YoY growth of 12.67%, with monthly average growth of Rs 22.60 billion over 12 months.

In key performance ratios, the CASA ratio of the Bank improved to 39.51% as at 31st March 2025, from 38.07% at end December 2024, and consistently remains one of the best in the industry, the Bank said.

The Bank’s Tier 1 Capital Ratio as at 31st March 2025 was 14.276% post growth in risk-weighted assets in its balance sheet, while its Total Capital Ratio stood at 18.014%. Both ratios are comfortably above the regulatory minimum ratios of 10% and 14% respectively, and the Bank has already announced the first Tier 2 Green Bond by a bank in Sri Lanka to further strengthen the regulatory capital.

Meanwhile, the Bank's liquidity coverage ratio for the quarter reviewed stood at 539.62% for Rupees and 345.42% for all currencies, both well over the statutory minimum ratios of 100%. The Bank’s net stable funding ratio stood at 181.23% as at 31st March 2025, nearly double the minimum statutory requirement of 100%.

In terms of profitability, the Bank’s net interest margin increased to 4.74% for the quarter compared to 4.27% reported for 2024 and 4.22% a year ago. The Bank’s return on assets (before tax) improved to 3.12% compared to 2.54% a year ago, while the return on equity improved to 21.29% from 19.53% for the corresponding quarter of the preceding year.

The Bank’s cost to income ratio excluding taxes on financial services stood at 27.17%, as against the normalized ratio of 33.85% for 2024, while the figure inclusive of taxes on financial services was 36.00% for the quarter in comparison with 41.89% for the preceding year, when the effect of the net loss on restructuring of SLISBs is discounted. 

In terms of asset quality, the Bank’s impaired loans (Stage 3) ratio improved to 2.58% compared to 2.76% at end 2024 and 5.59% a year ago, while its impairment (Stage 3) to Stage 3 loans ratio further improved to 65.56% from 64.61% as at 31st December 2024 and 44.60% as at 31st March 2024.

Commercial Bank is the first Sri Lankan bank to be listed among the Top 1000 Banks of the World and has the highest market capitalisation in the Banking Sector in the Colombo Stock Exchange (CSE). The Bank is the largest private sector lender, the largest lender to the SME sector, is a leader in digital innovation and is Sri Lanka’s first 100% carbon-neutral bank. Commercial Bank operates a strategically located network of branches and automated machines island-wide, and has the widest international footprint among Sri Lankan banks, with 20 outlets in Bangladesh, a fully-fledged Tier I Bank with a majority stake in the Maldives, and a Microfinance company in Myanmar. The Bank recently received approval from Dubai Financial Services Authority to establish a representative office within the Dubai International Financial Centre (DIFC) and is the first Bank in Sri Lanka to achieve this milestone, making a significant step towards broadening its global footprint. The Bank’s fully-owned subsidiary CBC Finance Ltd., also delivers a range of financial services via its own branch network.

Photo caption:

Commercial Bank Chairman Mr Sharhan Muhseen and Managing Director/CEO Mr Sanath Manatunge