Costly Interest

Aug 25, 2008 (LBO) – Sri Lanka’s DFCC Vardhana bank after-tax profits fell 69.5 percent to 16.3 million rupees in the quarter ended June 2008 as interest expenses took their toll of the bottom line, interim accounts showed. A subsidiary of the DFCC Bank, Vardhana bank’s revenue shot up 52.6 percent to 787.4 million rupees during the June quarter.

The bank’s interest income was also up 57.8 percent to 716.9 million rupees.

For the six months up to June 2008, net profit fell 23.2 percent to 58.148 million rupees while revenue increased 58.9 percent to 1,494 million.

Interest income for the 6-month period also increased more than 50 percent to 1,328 million.

Total interest cost shot up 52.2 percent to 450.9 million while non-interest expenses went up 48.7 percent to 182.8 million rupees, affecting the bottom line of the bank in the June quarter.

Provision for bad loans grew to 91.0 million rupees, interim results showed.

Foreign exchange income of 21.3 million a year ago had turned to a loss of 3.7 million rupees in this quarter.

However, non-interest income grew 14.1 percent to 70.4 million rupees.

The bank’s performing loans and advances increased at a slower rate of 7.2 percent to