DFCC Bank recorded a profit after tax of Rs 2,217 million for the period ended September 30, 2019 before the adjustment for the fair value loss on Commercial Bank of Ceylon PLC (CBC)in comparison to profit after tax of Rs 2,723 million recorded in the comparative period.
The Bank’s profit after tax with the adjustment for the fair value loss on CBC shares amounted to Rs 1,594 million for the current period against Rs 1,791 million in the comparative period. On the same basis, the Group recorded a profit after tax of Rs 1,765 million for the period ended 30 September 2019 compared to Rs 1,955 million in the comparative period.
The Bank recorded a total operating income amounting to Rs 9,839 million for the period ended September 30, 2019, compared to Rs 9,296 million for the comparative period, recording an increase of 6%. Fees and commission income grew by 3% to Rs 1,468 million for the period ended September 30, 2019 from Rs 1,422 million in the comparative period.
Operating Expenses
DFCC Bank sustained its branch expansion while driving many digitalinitiatives during the period.Operating expenses increased to Rs 5,531 million from Rs 4,862 million in the comparative period. This increase was mainly due to aggressive network expansion, as well as rolling out “My Space” self banking locations that include ATMs and Cash Recyclers etc; in order to deliver a convenient customer experience. “DFCC MySpace” self-banking platforms have attracted a significant number of new customers due to the facilities being available 24x7/365 days of the year.
Challenging business environment faced by most industries resulted in delay or non-payment of dues on time by clients. As a result, the impairment provision during the period ending 30 September 2019 increased to Rs 795 million which is an increase of 26% compared to Rs 633 million recorded in the comparable period.
Investments in equity securities and treasury bills and bonds (fixed income securities) are classified as financial assets and the change in fair value is recorded through Other Comprehensive Income. Accordingly, fair value losses of Rs 1,400 million and a net fair value gain of Rs 1,675 million were recorded on account of equity and fixed income securities, respectively. The drop in the share price of Commercial Bank of Ceylon PLC during the period mainly contributed to the reported fair value loss in equity securities, whilst the movement of interest rates of treasury bills and bonds favourably resulted in the fair value gain that was recorded during the period.
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