Analysis of Financial Performance

of Commercial Bank of Ceylon

PLC

Presented by Nilam Hallaldeen

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Our Focus Areas

The Company

Banking Sector

Non Financial Information

Financial Analysis

Conclusion

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• Started as Eastern Bank Ltd

• Business Structure

• Awards & Achievements

• Strategic Direction

The company

Corporate40%

Personal52%

Overseas8%

Product Range

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• 22 Licensed commercial banks & 14 specialized banks

• Market Share

• Deposits - Rs. 200 billion

• Loans & Advances - Rs. 180 billion

• Total Assets - Rs. 254 billion

• Industry Dynamics

• High Inflation

• High Interest rates

• High Expenditure

• Statutory Reserve Requirement Reduction

Banking Sector - 2008

13%

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Non Financial Information

Commercia

l Sampath HNB NTB

Branches 181 114 177 38

Staff 4041 2364 4395 1615

ATMs 346 171 260 47

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Non Financial Information

Commercial

Sampath

HNB NTB

Staff/Branch 22 21 25 43

Income/Employee

11 9 8 6

Income/Branch 243 195 210 270

Profit/Employee 1.0 0.6 0.7 0.3

Profit/Delivery centre

12 8 12 11

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Company LOGO

Financial Analysis

• Profitability Ratios

• Asset Management Ratios

• Market Investor Ratios

• Liquidity Ratios

• Debt Management ratios

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Company LOGO

Profitability Ratios

• Net Interest Margin

• Return on Shareholders’ Fund (ROE)

• Return on Assets

• Year on Year Growth

• Cost to Income

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Company LOGO

Net Interest Margin

2004 2005 2006 2007 20080

1

2

3

4

5

6 Com-mercial Sampath HNB

Financial Year

Net

Inte

rest

Marg

in %

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Company LOGO

Return on Shareholders’ Fund (ROE)

2004 2005 2006 2007 20080

5

10

15

20

25 Commercial Sampath HNBNTB

Financial Year

Retu

rn o

n S

hare

hold

ers

’ Fu

nd

(R

OE)

%

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Company LOGO

Return on Assets

2004 2005 2006 2007 20080

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8 Com-mercial Sampath HNB

Financial Year

Retu

rn o

n A

ssets

%

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Company LOGO

Income Growth

2004 2005 2006 2007 2008

-20

0

20

40

60

80

100 Com-mercial Sampath HNB

Financial Year

Incom

e G

row

th %

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Company LOGO

Cost to Income Ratio

2004 2005 2006 2007 20080

10

20

30

40

50

60

70Com-mercial

Sampath

Financial Year

Cost

to I

ncom

e R

ati

o %

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Company LOGO

Asset Management Ratios

• Advance to Deposit & Refinance

• Capital Adequacy

• Tier I Capital

• Tier II Capital

• Non Performing Loans (Assets)

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Company LOGO

Advance to Deposit & Refinance

2004

2005

2006

2007

2008

0 10 20 30 40 50 60 70 80 90100

8790

71 NTB

HNB

Sampath

Commercial

Advance to Deposit & Refinance %

Fin

an

cia

l Y

ear

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Company LOGO

Capital Adequacy Ratio- Tier I Capital

2004 2005 2006 2007 20080

2

4

6

8

10

12

11

8

Com-mercial Sampath HNB

Financial Year

Cap

ital A

deq

uacy R

ati

o –

Tie

r I

%

Statutory Requiremen

t

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Company LOGO

Capital Adequacy Ratio- Tier I & II Capital

2004 2005 2006 2007 20080

2

4

6

8

10

12

14

16

18

13%

16%Com-mercial Sampath HNB

Financial Year

Cap

ital A

deq

uacy R

ati

o-

Tie

r I

& I

I %

Statutory Requirement

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Company LOGO

Non - Performing Loans (Assets)

2004 2005 2006 2007 20080

2

4

6

8

10

12 Com-mercial Sampath HNB

Financial Year

Non

- P

erf

orm

ing

Loan

s

(Assets

) %

Industry Average = 6.2

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Company LOGO

Liquidity Ratios

• Liquid Fund to Liabilities

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Liquid Fund to Liabilities

2004 2005 2006 2007 20080

5

10

15

20

25

30

35

40

45 Com-mercial Sampath HNB

Financial Year

Liq

uid

Fu

nd

to L

iab

ilit

ies %

CBSL Recommendation

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Company LOGO

Market / Investor Ratios

• Earnings per Share (EPS)

• Dividends per Share (DPS)

• Price Earning Ratio (P/E)

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Company LOGO

Earnings per Share (EPS)

2004 2005 2006 2007 20080

5

10

15

20

25 Com-mercial Sampath HNB

Financial Year

Earn

ing

s p

er

Sh

are

(EP

S)

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Company LOGO

Dividends per Share (DPS)

2004 2005 2006 2007 20080

1

2

3

4

5

6

7

8 Commercial Sampath HNBNTB

Financial Year

Div

iden

ds p

er

Sh

are

(D

PS

) %

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Company LOGO

Price Earning Ratio (P/E)

2004 2005 2006 2007 20080

10

20

30

40

50

60 Com-mercial Sampath HNB

Financial Year

Pri

ce E

arn

ing

Rati

o (

P/E

)

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Company LOGO

Debt Management Ratios

• Debt to Equity

• Interest Cover

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Company LOGO

Debt to Equity

2004 2005 2006 2007 20080.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70Com-mercial Sampath HNB

Financial Year

Deb

t to

Eq

uit

y

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Company LOGO

Interest Cover

2004 2005 2006 2007 20080

2

4

6

8

10

12

14

16 Com-mercial Sampath HNB

Financial Year

Inte

rest

Cover

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Company LOGO

The Way forward

• Enhancing the customer convenience

• Building high performance culture

• Expanding to international market (Specially in South Asia)

• Prudent growth

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Company LOGO

Conclusion

• The average growth rate of COMB is expected to be 12% during next five years.

• The required return on equity is forecasted to be 22% in next five years.

• Commercial bank is expected to maintain a payout ratio of 40% during the next five years.