Sri Lanka’s housing finance giant HDFC Bank reported a sharp drop in profits and profitability for the last quarter of 2005, on higher staff and interest costs and the state levied VAT payments. Value Added Tax (VAT) payments jumped to Rs. 23 million in the quarter to December 2005, up from Rs. 7.5 million in 2004.
Full year VAT payment at Rs. 55 million is up 32 percent from 2004’s Rs. 41.4 million.
HDFC officials told LBO on Friday that staff costs were not fully included in earlier VAT calculation, resulting in a higher fourth quarter total.
Some of the staff costs were not included in calculating VAT in the first nine months, a senior HDFC official said, adding that we got a clarification form the Inland revenue Department and adjusted the VAT payments for the whole year in last quarter.
VAT payments for 2006, meanwhile will be higher as the government increased the VAT on financial service from 15 percent to 20 percent effective from January 1 this year.
The housing finance company also recorded a Rs. 8 million increase in staff costs to Rs. 30.8 million.
Interest expenses also shot up to Rs. 136.6 million, from Rs. 108.5 million in the last