Lower Profits

July 30, 2010 (LBO) – Sri Lanka’s PABC Bank’s net profit for the June 2010 quarter fell 60 percent to 83 million rupees from a year earlier, despite lower loan loss provisions, as fee income fell steeply. Interest income fell 17 percent to 704 million rupees amid a falling rate environment and interest expenses fell at a faster 34 percent to 328 million rupees, allowing net interest expenses to rise 8 percent to 376 million rupees.

Loan loss provisions fell 91 percent to 7.6 million rupees for the quarter from 81 million rupees a year earlier.

But fee income fell 67 percent to 98 million rupees from 298 million rupees a year earlier. In the 2009 many banks made large profits on their bond portfolio when interest rates fell as Sri Lanka emerged from a balance of payments crisis.

PABC said its performing loans rose to 12.9 billion rupees by end June 2010 from 9.8 billion rupees in December 2009. Total non-performing loans fell to 2.48 billion rupees from 2.51 billion rupees.

“There is now much greater focus in growing the business and we are confident that the Bank has now started gaining the momentum which will see greater results in the second half of the year,” chief executive Claude