Tight Quarter

May 26, 2009 (LBO) – Sri Lanka’s Commercial Bank said group profits fell 12.9 percent to 892 million rupees in the March 2009 quarter, as its loan book shrank and the firm also changed the way it accounted for a troubled oil derivative sale.

“In the future provisions will be provided after making an assessment of the situation,” a company official said.

“Such provision if needed will not be less than regulatory requirements.”

Last year’s provisions will also not be reversed.

At least two foreign banks that sold derivatives to CPC have gone into arbitration and banks have also submitted proposals to stagger payments through several rounds of negotiations which now appear to be stalled.

Commercial Bank’s deposits increased to 204.2 billion rupees from 199.8 billion rupees.

Gross assets rose to 260.7 billion rupees from 255.3 billion rupees. Net assets rose 3.46 percent to 27.1 billion rupees. Interest income rose 3.12 percent to 9.1 billion rupees, while interest expense rose at a faster 5.56 percent to 6.2 billion rupees. Net interest income fell 1.68 percent.

The bank’s performing loan book fell to 166.4 billion rupees from 175.7 billion from December to March. Non-performing loans increased 31 percent t