Loan Slowdown

Feb 25, 2009 (LBO) – Sri Lanka’s DFCC Bank said group net profit for the December 2008 quarter rose 25 percent to 638 million rupees from a year ago but that earnings growth was slowing because of reduced lending and capital gains. Total group income for the December quarter rose 23 percent to 3.5 billion rupees with net interest income rising 15 percent to just over a billion rupees.

The group’s non-interest income for the quarter shot up 177 percent to 388 million rupees from a year ago, according to unaudited accounts filed with the stock exchange.

DFCC Bank chief executive Nihal Fonseka said in a statement that at bank level, after-tax profit for the nine months ended 31 December 2008 rose 7.6 percent to 1,167 million rupees compared with the same April to December period in 2007.

“The rate of increase has slowed down from the half year primarily due to the cumulative impact of the reduction of the advances and asset portfolio and reduced capital gains in the third quarter,” he said.

“The slower growth in profit is the outcome of a strategy to control credit portfolio growth and utilize improved liquidity to reduce borrowings and maintain a healthy liquidity cushion in the context of the uncertainties in the