DFCC Bank has reported a partial sale of its Sri Lankan sovereign bond holdings, resulting in a loss of 2.17 billion rupees. This transaction, however, led to the reversal of 2.45 billion rupees in previously set provisions.
The bank’s sovereign bond portfolio was valued at 4.59 billion rupees by the end of December 2023, a decrease from 5.22 billion rupees a year earlier. The decline in rupee value was partly due to currency appreciation over the year.
DFCC Bank had made a 50 percent impairment provision for the International Sovereign Bonds (ISBs) by year-end. Additionally, the sale of government securities resulted in a gain of 2.06 billion rupees.
Group interest income for the quarter ending March 2024 fell by 25 percent to 18.5 billion rupees, as the bank reduced lending rates. Interest costs decreased by 33 percent to 11.85 billion rupees, leading to a 6 percent drop in net interest income to 6.72 billion rupees. However, net fee and commission income grew by 6 percent to 930 million rupees.
Provisions for bad loans were reduced to 1.11 billion rupees from 3.11 billion rupees last year. Personnel expenses rose by 76 percent to 1.93 billion rupees due to salary increases.
Despite these changes, the group’s net profit remained relatively stable at 1.85 billion rupees, compared to 1.82 billion rupees the previous year, resulting in earnings of 4.31 rupees per share. For the six months ending June, the group’s earnings increased by 47 percent to 5.53 billion rupees, with earnings of 13.17 rupees per share.
Gross assets decreased by 1 percent to 564 billion rupees, while equity grew by 6 percent to 76 billion rupees. The bank’s loan book expanded by 3 percent to 357 billion rupees, and Tier 1 capital adequacy improved to 13.1 percent from 12.4 percent. Total capital adequacy increased to 16.8 billion rupees from 14.4 billion.