The DFCC Group recorded a consolidated profit after tax of Rs. 637m for the three months ended 30 June 2015 compared with Rs. 1,138m in the corresponding period of the previous year (comparable period). The prior period included a one off adjustment due to a change to the impairment
The Banking Business comprising the DFCC Bank (DFCC), a licensed specialized bank and its 99% owned subsidiary DFCC Vardhana Bank PLC (DVB), a licensed commercial bank contributed Rs. 643m to profit after tax. The contribution from all other subsidiaries, joint venture and associate company collectively was Rs. 1m.
The Banking Business of the DFCC Group is undertaken by DFCC and DVB. Both banks function as one economic entity and as such it is appropriate to analyze the consolidated performance of the two banks as DFCC Banking Business (DBB). A consolidated Income statement for DBB has been released to the Colombo Stock Exchange as supplementary financial information.
This statement was derived from the interim financial statements. Since the financial year of DVB ends in December, the accounts of DVB are consolidated with a three month lag.
DBB recorded a profit after tax (PAT) of Rs. 643 m during the current quarter. The PAT for the previous comparable period included an adjustment arising from a change to the impairment assessment processes which contributed Rs. 553 m to PAT. The PAT for the current period of Rs. 643 is an increase of 20% over that for the previous period excluding the one off adjustment referred to above.
Net Interest Income (NII) of DBB for the period increased by 4% from Rs. 1,693m to Rs. 1,757m. DBB also achieved a credit growth of 4% during the quarter ended 30th June 2015. Net fee and commission income of DBB in the current period increased by 23% to Rs. 259m compared to Rs. 211m in the previous comparable period. Fee income is generated largely by DVB the commercial banking subsidiary from trade finance and commercial banking services.
The Gain on Sale of equity securities by the Bank was Rs. 37m compared to Rs. 100m in the comparable period. The forward exchange contracts are accounted as a derivative and its fair value changes are reported as net gain / (loss) from financial instruments at fair value through profit or loss in the income statement.
Proposed Amalgamation of DFCC and DVB
Boards of Directors of DFCC Bank PLC (DFCC) and DFCC Vardhana Bank PLC (DVB) by resolutions passed on 15th May 2015 resolved to amalgamate DVB with DFCC subject to the approval of the shareholders and the Central Bank of Sri Lanka (CBSL), whereby the amalgamated entity (i.e surviving entity) will be DFCC which would operate as a Licensed Commercial Bank under the Banking Act No. 30 of 1988.
In order to proceed with the amalgamation, pursuant to a Board Resolution passed on 9 July 2015, an application has been made to the Central Bank for DFCC to be granted a license under the Banking Act to carry on the business of a commercial bank and we have also convened an Extraordinary General Meeting to be held on 28th August 2015 to obtain the approval of the shareholders.