This financial review offers insights into the Bank’s performance during the year under review. It should be read in conjunction with the Operating Context and Outlook section (pages 48 to 53), which outlines global, local and sector trends influencing the Bank’s performance and the Management Discussion and Analysis section (pages 62 to 159), which elaborates how the Bank enhanced its financial and other capitals within the context of its Sustainability Framework and strategic imperatives.

Performance of the Group

An overview

In a period marked by lingering effects of the challenges from previous years, the Commercial Bank Group, comprising Sri Lanka’s largest private sector bank, its subsidiaries and the associate, concluded the year 2023 with robust operational performance. The Group’s assets grew to Rs. 2.656 Tn., marking a 6.24% (2022: 26.02%) increase from Rs. 2.500 Tn. at the end of 2022. Notably, the Group’s gross income experienced a significant growth, rising by 21.82% (2022: 71.31%) to reach Rs. 341.566 Bn. compared to Rs. 280.387 Bn. in 2022. Moreover, the total operating income and profit after tax for the year amounted to Rs. 122.070 Bn. (2022: Rs. 136.637 Bn.) and Rs. 21.900 Bn. (2022: Rs. 24.399 Bn.), respectively, demonstrating the Group’s resilience and adaptability in navigating challenging economic conditions.

With the Bank representing 97.17% of the total assets (2022: 97.05%) and 93.43% of the Group’s profit after tax (2022: 94.14%), the following analysis delves into the Bank’s financial performance in detail. Subsequently, a brief overview of the Bank’s operations in Bangladesh, other overseas operations, local subsidiaries and the associate is given on pages 128 to 131.

Performance of the Bank

An overview

The Bank’s total assets exceeded the Rs. 2.500 Tn. milestone, marking a significant achievement as the first private sector commercial bank to do so, reaching Rs. 2.580 Tn. by December 31, 2023, compared to Rs. 2.426 Tn. in 2022, reflecting a growth of 6.37% (2022: 24.45%). This growth, amounting to Rs. 154.530 Bn., was primarily supported by an increase in deposits, which grew by Rs. 170.687 Bn., or 8.92% (2022: 32.66%), surpassing the Rs. 2.000 Tn. mark for the first time and reaching Rs. 2.085 Tn. by year-end, compared to Rs. 1.914 Tn. in 2022. Notably, Commercial Bank achieved the milestone of being the first private sector bank to surpass Rs. 2.000 Tn. in deposits in the fourth quarter of 2023, maintaining this status to date. The lending portfolio, adjusted for provision for impairment, grew by Rs. 45.917 Bn., or 4.06% (2022: 11.42%), reaching Rs. 1.176 Tn. by the end of the year, compared to Rs. 1.130 Tn. in 2022. It is noteworthy to mention that the Bank was able to increase its market share in total assets, deposits and loans and advances to 13.01%, 12.98% and 11.76% in 2023, respectively from 12.49%, 12.51% and 10.78% respectively, at the end of 2022, as shown in Table 06 on page 52. on the Bank's performance in 2023 compared to the Banking Sector.

It is pertinent to mention that the Bank achieved the above milestones despite the appreciation of the Rupee to 324.25 from 367.00 against the USD by 13.18% during the year.

In 2023, the Bank’s profit after tax amounted to Rs. 20.461 Bn., showing a decrease of 10.92% compared to Rs. 22.970 Bn. in 2022, which had experienced a negative growth of 2.70%. This decline is noteworthy considering the high tax regime throughout 2023, contrasting with 2022, where high taxes only affected the second half of the year.

The total operating income for 2023 decreased to Rs. 118.109 Bn., down by 11.12% from Rs. 132.888 Bn. reported in 2022, which had seen a significant increase of 45.40%.

However, impairment charges and other losses for 2023 decreased to Rs. 38.624 Bn., marking a 45.95% reduction compared to Rs. 71.462 Bn. recorded in 2022, which had shown a substantial increase of 189.41%, as detailed on page 306 under "Impairment charges and other losses". This decrease contributed to the Bank’s improvement in net operating income to Rs. 79.486 Bn., up by 29.40% in 2023 from Rs. 61.427 Bn. recorded in 2022, which had decreased by 7.91%.

The total operating expenses of the Bank increased to Rs. 42.644 Bn., showing an increase of 22.06% (compared to 20.92% in 2022) from Rs. 34.936 Bn. reported in 2022. Consequently, the profit before tax of the Bank improved to Rs. 31.880 Bn. in 2023 from Rs. 22.598 Bn. in 2022, marking a growth of 41.07% (as against the negative growth of 29.38% in 2022).

The Colombo Stock Exchange witnessed a notable turnaround from its subdued performance in 2022, with both the ASPI and S&P SL20 indices experiencing significant gains by the end of 2023. The ASPI surpassed the 10,000-point mark, rising from 8,500 points, marking a substantial growth of 25.50%. Similarly, the S&P SL20 index exceeded the 3,000-point threshold, showing a notable growth of 16.42%. Against this backdrop, the banking sector observed a remarkable surge in both trading volumes and share prices, attributed to the dissipation of perceived elevated risks associated with the sector stemming from the unprecedented operating conditions of 2022. The banking sector index more than doubled, reaching nearly 800 points by the end of the period. The Bank’s shares maintained the highest price-to-book value and market capitalisation among its peers in the banking sector. Consequently, the Bank’s market capitalisation ranking improved, moving from twelfth place among all listed companies on the Colombo Stock Exchange as of December 31, 2022, to ninth place by December 31, 2023.

Taking into account the Bank’s performance during the year, along with its dividend policy, capital augmentation plan and commitment to providing a reasonable return to shareholders, the Board of Directors has proposed a first and final dividend of Rs. 6.50 per share for the year 2023. This dividend consists of a cash dividend of Rs. 4.50 per share and a scrip dividend of Rs. 2.00 per share. In 2022, the Bank paid only a scrip dividend of Rs. 4.50 per share.

Income statement

Financial intermediation

The gross income increased by 21.90% in 2023, compared to the substantial growth of 71.20% in 2022, reaching Rs. 335.770 Bn., from Rs. 275.444 Bn., reported in 2022. This growth was mainly driven by significant contributions from both fund-based and fee-based operations, although other revenue sources experienced a decline, as elaborated below under “Other Income”. Given that the growth in gross income outpaced the growth in average assets for the year, which stood at 14.43% in 2023 (compared to 18.71% in 2022), the financial intermediation margin (calculated as gross income divided by average total assets) improved to 13.41% by the end of 2023, compared to 12.59% in 2022, representing an improvement of 82 basis points (bps). The financial intermediation margin for the banking sector as a whole stood at 14.56% in 2023.

Fund-based operations

Interest income, constituting 87.15% of the gross income amounting to Rs. 335.770 Bn. (compared to 79.26% in 2022), rose to Rs. 292.618 Bn. in the year from Rs. 218.327 Bn. in 2022, recording an improvement of 34.03% (compared to 67.37% in 2022). This increase was primarily driven by growth in both the average interest-earning assets by Rs. 262.721 Bn. and the average interest rate on interest-earning assets by 2.03%.

The growth in average interest-earning assets was primarily fueled by excess liquidity resulting from the increase in deposits outpacing the growth in loans and advances, leading to investments in Government securities. Notably, the negative growth observed in loans and advances for most part of the year reversed in the fourth quarter, registering a year-on-year growth of 3.76% in gross loans and advances. The average interest rate on interest-earning assets improved due to the re-pricing effect of maturing low-yielding treasury investments and loans and advances being reinvested/ granted at relatively higher rates. Interest income earned from sources other than loans and advances contributed 46.44% of total interest income, compared to 34.46% in 2022, marking an increase of 80.62% compared to 46.47% in 2022. Meanwhile, interest income from loans and advances increased by 9.53% in 2023 (compared to 80.95% growth in 2022), accounting for 53.56% of the total interest income, compared to 65.54% in 2022.

Interest expenses, comprising 71.60% of the interest income (compared to 62.56% in 2022), rose to Rs. 209.515 Bn. during the year from Rs. 136.583 Bn. in 2022, marking a significant increase of 53.40% (compared to a growth of 107.47% in 2022). This increase was primarily driven by growth in average interest-bearing liabilities by Rs. 230.566 Bn. and the rise in the average cost of funds by 2.76%, attributed to the impact of high-cost funding mobilised in 2022. However, the gradual improvement of the CASA ratio of the Bank, considered an industry benchmark, from 38.36% at the end of 2022 to 39.23% at the end of 2023, had a positive impact on the cost of funds.

As a result, the Bank’s net interest income increased to Rs. 83.104 Bn. from Rs. 81.744 Bn. recorded in 2022, recording a marginal growth of 1.66% (compared to 26.52% in 2022) and represented 70.36% of the total operating income (compared to 61.51% in 2022). However, the Bank’s net interest margin, which indicates the difference between the return on interest-earning assets and the cost of funds of interest-bearing liabilities, declined by 73 bps to 2.82% in 2023 compared to 3.55% reported in 2022.

Fee-based operations

Fee and commission income reached Rs. 29.704 Bn., compared to Rs. 25.464 Bn. in 2022, reflecting a growth of 16.65% (compared to 65.24% in 2022). This increase was primarily driven by higher income from credit and debit card-related services and other financial services provided during the year.

Fee and commission expenses, primarily associated with credit and debit card-related services, rose to Rs. 8.146 Bn. from Rs. 5.973 Bn. in 2022, marking an increase of 36.39% (compared to 63.24% in 2022). Consequently, net fee and commission income increased to Rs. 21.558 Bn. compared to Rs. 19.491 Bn. in 2022, showing a growth of 10.60% (compared to 65.86% in 2022). This income accounted for 18.25% of the total operating income (compared to 14.67% in 2022).

Other income

The Bank’s total other income, consisting of net gains or losses from trading, net gains or losses from derecognition of financial assets and net other operating income, decreased by 57.52% to Rs. 13.448 Bn. for the year, compared to Rs. 31.653 Bn. reported in 2022 (which had seen a growth of 110.57%). The primary factor contributing to this decline was the significant exchange losses incurred by the Bank from swap/forward transactions due to the sharp appreciation of the Sri Lankan Rupee against the US Dollar, reaching Rs. 324.25 at the end of 2023 from Rs. 367.00 at the end of 2022, an appreciation of 13.18%. However, the impact of these losses was partially offset by exchange gains resulting from the revaluation of assets and liabilities.

Total operating income

Although there were improvements in both net interest income and net fee and commission income, the total operating income of the Bank declined to Rs. 118.109 Bn., representing a decrease of 11.12% compared to Rs. 132.888 Bn. reported in 2022 (which had experienced a growth of 45.40%). This decrease was primarily attributed to a substantial drop in other income by Rs. 18.205 Bn. or 57.52%, as explained previously.

Impairment charges and other losses

Impairment charges and other losses for the year decreased significantly to Rs. 38.624 Bn., down by Rs. 32.838 Bn. or 45.95% (as opposed to an increase of 189.41% in 2022) from Rs. 71.462 Bn. reported in 2022, which marked the highest provision ever made by the Bank for a single year in its history.

The substantial increase in 2022 was primarily attributed to the Bank setting aside Rs. 47.134 Bn. for foreign currency-denominated securities issued by the Government of Sri Lanka following the downgrade of the sovereign rating, along with an additional Rs. 24.150 Bn. allocated for individual and collective impairment provisions for loans and advances. This provision also included management overlays to address potential losses not captured by impairment models due to the prevailing high level of uncertainty and volatility throughout the year.

For the year under review, the impairment provision consisted of Rs. 33.830 Bn. for foreign currency-denominated securities issued by the Government of Sri Lanka and Rs. 5.690 Bn. for loans and advances.

Net operating income

The net operating income for the year rose to Rs. 79.486 Bn., marking an increase of 29.40% (as against a negative growth of 7.91% in 2022) from Rs. 61.427 Bn. reported in 2022. This increase was primarily driven by the decrease in impairment charges and other losses, which more than offset the negative growth in total operating income as explained earlier.

Operating expenses

Total operating expenses for the year amounted to Rs. 42.644 Bn., compared to Rs. 34.936 Bn. reported in 2022, marking an increase of Rs. 7.708 Bn., or 22.06% (compared to 20.92% in 2022). This increase was primarily driven by an increase in personnel expenses by 14.96% (compared to 17.10% in 2022), reaching Rs. 21.972 Bn. from Rs. 19.113 Bn. in 2022, due to salary increments and other staff related expenses. Additionally, other operating expenses for the year also increased by 33.68% (compared to 30.54% in 2022) to Rs. 16.389 Bn. from Rs. 12.260 Bn. in 2022, attributed to price hikes across various expense categories, exchange impact of the higher foreign currency-related payments for asset maintenance and increased indirect taxes. Depreciation and amortisation expenses also rose to Rs. 4.284 Bn., marking a 20.21% increase (compared to 12.11% in 2022), primarily due to investments made in IT-related assets.

Consequently, the Bank’s Cost to Income ratio (excluding taxes on financial services) for 2023 increased to 36.11% for the year from 26.29% in 2022.

Operating profit before taxes on Financial Services and taxes on Financial Services

Due to the growth in net operating income surpassing the increase in total operating expenses, as discussed earlier, the operating profit before taxes on Financial Services improved by 39.07% (as against the negative growth of 29.94% in 2022), reaching Rs. 36.842 Bn. from Rs. 26.491 Bn. in 2022.

Taxes on Financial Services rose to Rs. 4.961 Bn., marking a 27.47% increase (as against the negative growth of 33.00% in 2022) from Rs. 3.892 Bn. in 2022. This increase was attributed to the introduction of the Social Security Contribution Levy of 2.5% effective from October 1, 2022 and the rise in amount of the in value addition attributable to the supply of financial services in 2023.

Consequently, the Bank’s Cost to Income ratio (including taxes on financial services) for 2023 increased to 40.31% for the year from 29.22% in 2022.

Profit before and after taxes

Due to the increase in operating profit before taxes on financial services outpacing the growth in taxes on financial services, as explained earlier, the profit before taxes for the year increased to Rs. 31.880 Bn., recording a growth of 41.07% (as against the negative growth of 29.38% in 2022).

The income tax charge for the year amounted to Rs. 11.419 Bn., in contrast to a tax reversal of Rs. 0.371 Bn. in 2022. This reversal in 2022 was primarily due to an increase in deferred tax assets resulting from the change in the income tax rate to 30% effective from July 01, 2022, compared to the previous rate of 24%. The overall reversal in deferred tax exceeded the current tax liability for 2022, which was computed at two different income tax rates: 24% for the first half of the year and 30% for the second half of the year for the Bank’s operations in Sri Lanka. The tax rate for the Bank’s operations in Bangladesh remained at 40% for both years.

Consequently, the profit after tax for the year recorded a negative growth of 10.92% (compared to the negative growth of 2.70% in 2022) and amounted to Rs. 20.461 Bn., compared to Rs. 22.970 Bn. reported for 2022.

Profitability

Reflecting the decline in profit after tax and the relatively higher growth in total assets and equity throughout the year, both the Return on Assets (ROA) and Return on Equity (ROE) decreased to 0.82% (compared to 1.05% in 2022) and 9.78% (compared to 12.46% in 2022) respectively.

However, the ROA (before tax) for the year increased to 1.27% (compared to 1.03% in 2022) due to the growth in profit before tax as explained earlier.

Other Comprehensive Income (OCI)

The Bank reported a loss of Rs. 8.465 Bn. in Other Comprehensive Income during the year, contrasting with a profit of Rs. 26.215 Bn. reported in 2022. This was primarily due to a loss of Rs. 11.086 Bn. (as against the gain of Rs. 14.877 Bn. in 2022) on the translation of financial statements of the Bank’s foreign operations. However, this loss for the year was partially offset by a net gain of Rs. 1.899 Bn. recognised fair valuation of investments in Financial Assets at Fair Value through Other Comprehensive Income (FVOCI), which was derived after discounting Rs. 3.542 Bn. recognised in profits as gains on disposal of financial assets at FVOCI during the year.

In contrast, in 2022, there was a reversal in fair value losses due to the reclassification of debt instruments from Fair Value through Other Comprehensive Income (FVOCI) to Amortised Cost (AC), amounting to Rs. 12.292 Bn. This was due to the Bank’s decision to reclassify a significant portion of its Treasury Bond Portfolio amounting to Rs. 197.075 Bn., Sri Lanka Development Bond (SLDB) portfolio amounting to Rs. 55.473 Bn. (USD 152.19 Mn.) and the entire Sri Lanka Sovereign Bond (SLSB) portfolio amounting to Rs. 39.596 Bn. (USD 108.63 Mn.) from the FVOCI category to AC category, effective from April 01, 2022, in line with the guidelines issued by the CA Sri Lanka in the form of a Statement of Alternative Treatment (SoAT) on “Reclassification of Debt Portfolio due to unprecedented changes in the macro-economic conditions”.

The aforementioned fair value loss of Rs. 12.292 Bn. comprised the cumulative losses that the Bank recognised (net of tax) in equity through OCI prior to the reclassification. Furthermore, the effect of the loss of Rs. 11.086 Bn. on the translation of financial statements of the Bank’s foreign operation for 2023 was partly offset by the net surplus on the revaluation of freehold land and buildings of the Bank, amounting to Rs. 1.012 Bn., recognised in equity through OCI.

In 2022, there was an increase in the deferred tax liability recognised on the cumulative surplus on the revaluation of freehold land and buildings of the Bank, amounting to Rs. 0.799 Bn., due to the increase in the income tax rate to 30% effective from July 2022 from the earlier income tax rate of 24%.

As a result, the total comprehensive income of the Bank for the year 2023 reduced to Rs. 11.996 Bn., compared to Rs. 49.185 Bn. reported in 2022, reflecting a negative growth of 75.61% (as against the growth of 281.24% in 2022).

Statement of Financial Position

In 2023, the Bank achieved two significant milestones, continuing its trend of pioneering achievements. Firstly, it became the first private sector bank in the country to exceed Rs. 2.5 Tn. in total assets, reinforcing its position as a leader in the banking sector. Secondly, it surpassed the Rs. 2 Tn. mark in deposits, further solidifying its status as the benchmark private sector bank in the country. These accomplishments add to the Bank’s legacy of being the first private sector bank to surpass the Rs. 1 Tn. mark in total assets (achieved in 2016), deposits (achieved in 2019) and loans and advances (achieved in 2021).

Assets

During the year, the Bank’s total assets grew by 6.37% (compared to 24.45% in 2022), reaching Rs. 2.580 Tn. from Rs. 2.426 Tn. at the end of the previous year. This growth significantly exceeded the industry’s asset growth of 2.16% (compared to 17.72% in 2022). This notable increase was primarily attributed to increased investments in Government Securities, driven by excess liquidity resulting from deposit growth outpacing the expansion of loans and advances.

However, it is important to note that the projected asset growth was hindered by the downward revaluation effect of the Bank’s assets and liabilities denominated in foreign currency. This was due to the sharp appreciation of the Rupee against the US dollar during the year, contrasting with the Rupee’s sharp depreciation against the US dollar witnessed during the previous year.

Loans and advances to customers

Reversing the trend observed in the first half of 2023, credit to the private sector increased during the latter part of the year. As of December 31, 2023, gross loans and advances amounted to Rs. 1.266 Tn., compared to Rs. 1.220 Tn. a year ago. The net loans and advances stood at Rs. 1.176 Tn. as of December 31, 2023, compared to Rs. 1.130 Tn. at the end of 2022, reflecting a growth of 4.06% (compared to 11.42% in 2022). Loans and advances accounted for 45.59% of total assets as of December 31, 2023, marginally lower than the 46.60% reported in 2022.

The Bank maintained its position as the largest lender to the SME sector in Sri Lanka. (see page 79 for details). Additionally, the gross loans and advances of the Bank’s operations in Bangladesh experienced a growth of 24.13% in 2023 (as against the negative growth of 11.27% in 2022) in BDT terms.

Asset quality

The quality of loans and advances serves as a critical factor in assessing the sustainability of the Bank’s operations. Despite challenging macro-economic conditions that prevailed in the country in 2023, the Bank maintained a conservative risk profile, coupled with a moderate risk appetite and a robust risk management framework. This approach resulted in both the net impaired loans (Stage 3) to total loans and advances ratio (including undrawn commitments) and impaired loans (Stage 3) to total loans and advances ratio (excluding undrawn commitments) standing at 5.85% (2022: 5.25%) and 11.34% (2022: 9.41%), respectively, by the end of 2023. These figures compare favourably to industry averages of 13.56% (2022: 11.26%) and 13.41% (2022: 11.61%), respectively, indicating the Bank’s prudent risk management practices. Although there was a deterioration in both the above ratios in 2023 due to the unprecedented macro-economic conditions that prevailed in the country, it is worth noting that both ratios remain within acceptable levels when compared to industry averages.

Additionally, the impairment (Stage 3) to Stage 3 loans ratio (Stage 3 impairment coverage ratio) and the cumulative impairment provisions for loans and advances as a percentage of the total loans and advances (total impairment coverage ratio) stood at 44.03% (2022: 40.42%) and 7.05% (2022: 7.32%), respectively, by the end of 2023. These figures, though showing a slight deterioration compared to the previous year, remain acceptable compared to industry averages. The Bank continued to review and adjust the stage assessment criteria for loans and advances to accurately reflect the associated risks with customers.

Moreover, the open credit exposure ratio, representing the net exposure on Stage 3 loans as a percentage of regulatory capital, stood at 38.69% at the end of 2023 (2022: 34.41%) compared to industry averages of 45.39% (2022: 44.00%), indicating prudent risk management practices in mitigating credit risks.

Furthermore, the Bank’s loans to customers portfolio is well diversified across various industry sectors, with no significant exposure to any particular sector, ensuring resilience against sector-specific risks. Additional details regarding the sector-wise distribution of loans to customers can be found on page 328.

Deposits

With our solid franchise, customer deposits continued to remain the primary source of funding for the Bank, constituting 80.81% of the total assets as of December 31, 2023 (2022: 78.92%), compared to the industry average of 80.97% (2022: 78.79%). Deposits grew by 8.92% to reach Rs. 2.085 Tn. by the end of 2023, compared to the growth rate of 32.66% in 2022, which was influenced by the sharp depreciation of the Rupee against the US Dollar during that period. The growth in deposits for the year amounted to Rs. 170.687 Bn.

Despite these challenges, the Bank’s CASA ratio marginally improved to 39.23% as of December 31, 2023, compared to 38.36% in 2022, which is considered the industry best compared to the industry average of 30.61% in 2023 (2022: 31.18%).

Other liabilities

The substantial increase in deposit liabilities compared to the relatively lower growth in loans and advances resulted in the Bank having excess liquidity throughout the year. Total other liabilities at the year-end amounted to Rs. 280.351 Bn., compared to Rs. 307.740 Bn. at the end of 2022. During the year, the Bank raised Rs. 12.000 Bn. through the issuance of BASEL III compliant debentures (compared to Rs. 10.000 Bn. in 2022), while BASEL III compliant debentures worth Rs. 8.294 Bn., issued in 2018 were matured during the year (2022: Nil). Additionally, the Bank successfully settled borrowings from IFC amounting to Rs. 24.100 Bn. in March 2023 obtained in March 2013 to strengthen Tier II Capital.

Capital

The Bank is guided by its Internal Capital Adequacy Assessment Process (ICAAP), Capital Augmentation Plan and the Board-approved dividend policy to maintain capital levels aligned with its current and projected business growth. Consequently, supported by the total comprehensive income for the year and the prudent dividend policy, the Bank increased its equity capital by 5.51% (2022: 23.53%) to Rs. 214.931 Bn. as of December 31, 2023, compared to Rs. 203.699 Bn. as of December 31, 2022. With an on-balance sheet multiplier (gearing ratio) of 12.01 times (2022: 11.91 times), equity funded 8.33% (2022: 8.40%) of total assets as of the current year-end, compared to industry averages of 11.52 times (2022: 12.15 times) and 8.68% (2022: 8.23%) respectively. The Bank ploughed back Rs. 12.660 Bn., from the profit for the year 2022 after the payment of one-off surcharge tax and dividends.

The risk-weighted assets of the Bank increased by 1.12% to Rs. 1.371 Tn. as of December 31, 2023, from Rs. 1.356 Tn. as of the end of 2022. Consequently, both the Tier 1 and total capital ratios stood at 11.442% (2022: 11.389%) and 15.151% (2022: 14.657%) respectively, as of December 31, 2023, exceeding the minimum requirements of 10.000% and 14.000% respectively, for 2023. These ratios demonstrate the Bank’s compliance with the higher capital adequacy requirements as a Domestic Systemically Important Bank (D-SIB) under Basel III regulations. The equity multiplier, in terms of risk-weighted assets to regulatory total capital, decreased to 6.60 times from 6.82 times a year ago.

Under the CBSL Basel III regulations, the Bank is classified as one of the highest-graded D-SIBs, highlighting its significance to the Sri Lankan economy.

Liquidity

The growth in deposits continued to surpass the growth in loans and advances during the current year as well, prompting the Bank to invest excess liquidity in Government securities. Despite unprecedented volatility, excess liquidity offers a high level of reassurance to the Bank and positions it to capitalise on anticipated increases in credit demand in the future. Given its significance, liquidity review remains a permanent agenda item in the Bank’s fortnightly ALCO meetings. The consolidated liquid assets ratio of the Bank’s Sri Lankan operations stood at 46.06% (2022: 35.88%), compared to the statutory minimum requirement of 20%.

The gross loans to deposits ratio was 60.70% (2022: 63.71%). Available stable funding, as defined by the CBSL, amounted to Rs. 1.933 Tn. as of December 31, 2023 (2022: Rs. 1.768 Tn.), leading to a Net Stable Funding Ratio (NSFR) of 193.70% (2022: 173.58%), comfortably above the statutory minimum of 100% for 2023 (2022: 90%). This underscores the Bank’s ability to meet its long-term funding requirements.

Moreover, the Liquidity Coverage Ratio (LCR) for all currencies and LCR for the Rupee stood at 516.27% (2022: 293.91%) and 491.61% (2022: 405.91%) respectively, as of December 31, 2023, well exceeding the statutory minimum of 100% (2022: 90%) for both ratios for 2023. These ratios highlight the Bank’s ample supply of unencumbered high-quality liquid assets, ensuring its ability to withstand short-term liquidity disruptions.

Segmental performance

The Corporate and the Personal Banking Divisions made a significant contribution to the Group’s profit before tax in 2023, primarily driven by a reduction in impairment charges and other losses. The International Operations too enhanced its contribution to the Group’s profit before tax during the year, largely attributed to rises in net interest income and foreign exchange profits. However, the Treasury Division of the Bank experienced a substantial loss for the year 2023, albeit lower than the previous year, mainly due to additional impairment provisions related to USD-denominated Government Securities following the downgrade of the country’s sovereign rating and the impact of interest rate volatility on the Funding Centre being borne by the Treasury.

For a detailed analysis of segmental performance, please refer to pages 126 and 127 and the Note 61 to the Financial Statements on Operating Segments.

Quarterly financial performance and the financial position of both the Group and the Bank for 2023 and 2022 can be found on pages 132 to 137, while the Bank’s performance in terms of key indicators over the past 10 year period is given in the “Decade at a Glance” section.

The Financial Soundness Indicators presented below offer valuable insights into the financial robustness and stability of the Bank.

Core Financial soundness indicators (FSIs)

Table - 22

Financial soundness indicator (%)	2023	2022	2021	2020	2019
Capital Adequacy (under Basel III)
Common equity Tier 1 ratio (current minimum requirement – 8.5%)	11.44	11.39	11.92	13.22	12.30
Tier 1 capital ratio (current minimum requirement – 10%)	11.44	11.39	11.92	13.22	12.30
Total Capital Ratio (current minimum requirement – 14%)	15.15	14.66	15.65	16.82	16.15
Asset quality:
Impaired loans (Stage 3) ratio (based on existing regulatory provisions which includes undrawn commitments)	5.85	5.25	3.85	6.78	N/A
Impairment (Stage 3) to Stage 3 loans ratio (based on existing regulatory provisions which includes undrawn commitments)	43.22	39.60	42.76	30.87	N/A
Total impairment coverage ratio	7.05	7.32	5.94	5.38	3.89
Cost of credit risk	0.45	1.80	1.35	1.88	1.09
Open credit exposure ratio (Net exposure on NPCFs as a % regulatory capital)	38.69	34.41	25.33	N/A	N/A
Non-performing credit facilities (NPCFs) – (net of impairment) to equity	37.38	33.56	26.69	N/A	N/A
Earnings and profitability:
Net interest income to total operating income	70.36	61.51	70.69	66.15	71.51
Net fee and commission income to total operating income	18.25	14.67	12.86	12.35	15.59
Other income to total operating income	11.39	23.82	16.45	21.50	12.91
Operating expenses to gross income	12.70	12.68	17.96	16.99	17.10
Impairment charge to total operating income	32.70	53.78	27.02	28.67	16.76
Cost to income ratio (including taxes on financial services)	40.31	29.22	37.97	39.96	49.41
Cost to income ratio (excluding taxes on financial services)	36.11	26.29	31.61	33.95	38.51
Financial intermediation margin (gross income to average assets)	13.41	12.59	8.73	9.59	11.05
Interest margin (net interest income to average assets)	3.32	3.74	3.51	3.17	3.51
Return on assets (ROA) – before income tax	1.27	1.03	1.74	1.51	1.66
Return on assets (ROA) – after income tax	0.82	1.05	1.28	1.05	1.27
Return on equity (ROE)	9.78	12.46	14.66	11.28	13.54
Liquidity:
Statutory liquid assets ratio (consolidated – Sri Lankan Operations) – (current minimum requirement – 20%)	46.06	35.88	N/A	N/A	N/A
Liquidity coverage ratio (LCR) – Rupee – (current minimum requirement – 100%)	491.61	405.91	425.97	599.38	158.79
Liquidity coverage ratio (LCR) – All currency – (current minimum requirement – 100%)	516.27	293.91	242.52	422.86	224.74
Net Stable funding ratio (NSFR) – (current minimum requirement – 100%)	193.70	173.58	157.47	157.49	137.05
CASA ratio (current and saving deposits as a % of total deposits)	39.23	38.36	47.83	42.72	37.10
Gross loans and advances to deposits ratio	60.70	63.71	74.75	74.87	87.39
Assets and funding structure:
Deposits to gross loans and advances	164.75	156.96	133.78	133.56	114.43
Deposits to total assets	80.81	78.92	74.03	72.92	75.92
Borrowings to total assets	1.91	3.20	3.64	5.35	4.41
Equity to total assets	8.33	8.40	8.46	9.05	9.60

Segmental analysis

Personal banking

• Highest contributor to the Group in terms of net interest income, net fee and commission income and net operating income.
• Total operating income increased by 13.39% to Rs. 53.652 Bn., contributing almost 44% to the Group.
• Profit before tax increased by 35.97% to Rs. 22.335 Bn.
• Accounted for more than one fourth of the assets of the Group as at end of 2023.
• Impairment charges decreased by 108.16% mainly due to the reversal in impairment provisions consequent to the revision of the Economic Factor Adjustment (EFA) in line with the latest available macro economic forecasts.

Rs. Bn.	2023	2022	Change	Change as a %
Net interest income	40.715	36.988	3.727	10.08
Foreign exchange profit	0.604	0.385	0.219	56.88
Net fee and commission income	11.802	9.214	2.588	28.09
Other income	0.532	0.729	(0.197)	(27.02)
Total operating income	53.652	47.316	6.336	13.39
Impairment charges and other losses	0.702	(8.602)	9.304	(108.16)
Net operating income	54.354	38.714	15.640	40.40
Profit before tax	22.335	16.427	5.908	35.97
Segment assets	716.364	620.050	96.314	15.53

Corporate banking

• Net operating income and profit before tax increased to Rs. 19.179 Bn. and Rs. 16.561 Bn., respectively with significant increases of 403.39% and 1,408.29% respectively. The main contributory factor for the above increases was the decrease in impairment charges and other losses by 61.37% as a result of the reversal in impairment provisions consequent to revision of the Economic Factor Adjustment (EFA) in line with the latest available macro economic forecasts.
• Accounted for almost one fifth of the assets of the Group as at end of 2023.

Rs. Bn.	2023	2022	Change	Change as a %
Net interest income	21.869	20.629	1.240	6.01
Foreign exchange profit	(0.460)	0.121	(0.581)	(480.17)
Net fee and commission income	7.094	8.017	(0.923)	(11.51)
Other income	0.306	(0.029)	0.335	(1,155.17)
Total operating income	28.808	28.739	0.069	0.24
Impairment charges and other losses	(9.629)	(24.928)	15.299	(61.37)
Net operating income	19.179	3.810	15.369	403.39
Profit before tax	16.561	1.098	15.463	1,408.29
Segment assets	472.431	498.406	(25.975)	(5.21)

International operations

• Significant increases reported in net interest income and foreign exchange profit by 40.35% and 35.75% respectively.
• Highest contributor to the Group's foreign exchange profit amounting to Rs. 11.888 Bn., mainly due to the net exchange profit reported on revaluation of FCY denominated assets and liabilities of the Bangladesh operations.
• Total operating income increased by 35.29% to Rs. 34.282 Bn.
• The Bangladesh operation of the Bank made a noteworthy contribution of 91.95% of the profit before tax of international operations while having the highest asset base within the segment.
• Profit recorded by Commercial Bank of Maldives Private Limited for the year is the highest profit achieved by the Company during its 7-year history.

Rs. Bn.	2023	2022	Change	Change as a %
Net interest income	19.720	14.051	5.669	40.35
Foreign exchange profit	11.888	8.757	3.131	35.75
Net fee and commission income	2.576	2.387	0.189	7.92
Other income	0.098	0.145	(0.047)	(32.41)
Total operating income	34.282	25.339	8.943	35.29
Impairment charges and other losses	(0.239)	(1.091)	0.852	(78.09)
Net operating income	34.043	24.248	9.795	40.40
Profit before tax	26.654	17.424	9.230	52.97
Segment assets	449.873	422.835	27.038	6.39

Dealing/Treasury

• Highest contributor (36.47%) to the Group's total assets of Rs. 2.656 Tn., mainly due to excess liquidity being invested in treasury related products consequent to subdued demand for loans and advances.
• Other income of Rs. 6.821 Bn., highest within the Group, which was generated mainly due to the capital gains on realisation of Government securities.
• Considerable decrease in foreign exchange losses ( 98.48%) compared to previous year.
• Impairment charges and other losses reduced by 21.06% to Rs. 29.249 Bn.

Rs. Bn.	2023	2022	Change	Change as a %
Net interest income	(8.945)	3.214	(12.159)	(378.31)
Foreign exchange profit	(0.119)	(7.823)	7.704	(98.48)
Net fee and commission income	0.024	0.008	0.016	200.00
Other income	6.821	(1.343)	8.164	(607.89)
Total operating income	(2.218)	(5.944)	3.726	(62.69)
Impairment charges and other losses	(29.249)	(37.053)	7.804	(21.06)
Net operating income	(31.467)	(42.997)	11.530	(26.82)
Profit before tax	(32.237)	(44.857)	12.620	(28.13)
Segment assets	968.516	945.053	23.463	2.48

NBFI, Real Estate & Services

• Commercial Development Company PLC (CDC) was the main contributor in terms of profit before tax due to the increase in fair value gains recognised on investment properties.
• Impairment charges and other losses increased by 92.77%, mainly due to higher impairment charges provided by CBC Finance Ltd (CBCF).
• While accepting the challenge of growing the portfolios in an unprecedented market, CBCF’s total assets increased from 13.73%, with a growth in loans and advances portfolio.

Rs. Bn.	2023	2022	Change	Change as a %
Net interest income	0.755	0.679	0.076	11.19
Foreign exchange profit	(0.002)	0.002	(0.004)	(200.00)
Net fee and commission income	0.290	0.180	0.110	61.11
Other income	1.610	1.369	0.241	17.60
Total operating income	2.653	2.230	0.423	18.97
Impairment charges and other losses	(0.480)	(0.249)	(0.231)	92.77
Net operating income	2.173	1.981	0.192	9.69
Profit before tax	0.300	0.542	(0.242)	(44.65)
Segment assets	16.484	14.566	1.918	13.17

Performance of the overseas operations, subsidiaries and the associate

Performance of the Bank’s Bangladesh Operations

The performance of the Bank’s operations in Bangladesh (CBC Bangladesh) will have to be reviewed in conjunction with the Operating Context and Outlook section of this report.

Commencing its operations in Bangladesh in November 2003 by acquiring the banking business of Credit Agricole Indosuez, CBC Bangladesh has emerged as a leading player in the country’s banking sector over the past two decades. With a network comprising 20 operating units, including 11 branches, a sub-branch, six SME centers and two offshore banking units, CBC Bangladesh has established a strong foothold in the market. CBC Bangladesh has strategically positioned itself as a premier regional bank, focusing on corporate banking, consumer banking, treasury management and digital banking.

By the end of 2023, CBC Bangladesh possessed a total of 23 ATM machines, inclusive of seven in off-site locations. Additionally, at its Motijheel Branch, an Automated Banking Centre (ABC) has been established, featuring a real-time Cash Deposit Machine, Cheque Deposit Machine, KIOSK machine and digital signage.

CBC Bangladesh has achieved recognition as the top-performing regional bank, excelling in deposits, advances and profitability. This success stems from its commitment to delivering excellent service and fulfilling its commitments, with a focus on the following areas:

Corporate Banking:

In the domain of corporate banking, CBC Bangladesh has solidified its reputation as a premier regional bank since its inception. It has achieved this by delivering exceptional relationship banking services to corporate clients, resulting in a significant expansion of its corporate banking portfolio.

Consumer Banking:

In the realm of consumer banking, CBC Bangladesh aims to emerge as the preferred provider of retail, SME and credit card services for its target market. It intends to achieve this goal by leveraging a superior IT platform and offering innovative products. These efforts are directed towards cultivating a healthy deposit mix anchored by a robust savings base.

Treasury Management:

In the sphere of treasury management, CBC Bangladesh ensures consistent and efficient fund management. Leveraging superior expertise, it offers a range of diversified and innovative treasury products.

Digital Banking:

In the digital banking arena, CBC Bangladesh has launched innovative products, including the unique Digital Banking Product - the e-passbook. CBC Bangladesh also introduced PayMaster for corporate clients, ensuring smooth daily operations. Additionally, CBC Bangladesh has implemented a Two Factor Authentication system for online transactions, along with e-statements and Over the Air PIN (OTAP) for Credit Cards and Internet Banking, incorporating various innovative features.

Human resources:

CBC Bangladesh stands out as one of the most preferred employers in the banking industry. It has achieved this by offering excellent opportunities for training and development, introducing top-tier banking education programmes and fostering a healthy corporate environment.

Currently, CBC Bangladesh operates in five key districts across the country: Dhaka, Chittagong, Sylhet, Narayanganj and Gazipur. Despite facing stiff competition from both international and large local banks, CBC Bangladesh has consistently grown its business volumes. This growth is primarily attributed to its focus on serving multinationals and large local corporates with superior services and commitments. By expanding its branch network, CBC Bangladesh has successfully attracted more SME and retail clients, thus enhancing its low-cost deposit base, reducing the cost of funds and improving profitability.

In 2023, CBC Bangladesh upgraded its Internet Banking System with several innovative features, some of which were introduced for the first time in Bangladesh. These enhancements included the implementation of e-Leave and e-Attendance Systems, a revamp of the Corporate Website and the integration with the National Payment System Bangladesh (NPSB). Additionally, CBC Bangladesh introduced a Call Centre Solution and incorporated various new features to enhance its existing products and services.

In 2023, CBC Bangladesh received numerous awards and recognitions, including:

• Best Foreign Bank in Bangladesh – 2023 for the 4th consecutive year by Global Economic Limited, a UK-based magazine.
• Most Recommended Foreign Bank in Bangladesh – 2023 for the 3rd consecutive year by World Business Outlook, a Singapore-based magazine.
• Most Sustainable Bank in Bangladesh – 2023 for the 3rd consecutive year by International Business Magazine, UAE.
• Best Corporate Bank Bangladesh – 2023 for the 2nd consecutive year by Global Business Review Magazine, UAE.
• Best Foreign Bank in Bangladesh – 2023 by Global Business and Finance Magazine, USA.
• Most Innovative Foreign Banking Brand – Bangladesh – 2023 by Global Brand Magazine, UK.
• Bangladesh International Trade Finance Bank of the Year by Asian Banking & Finance Magazine, Singapore.
• Top Fastest Growing Companies to watch by Biz Tech Outlook, USA.
• Most Innovative Companies Focused on Changing the Future 2023 by The CIO Times Magazine, USA.

A significant highlight of the year was the recognition of Mr Najith Meewanage, Chief Executive Officer of CBC Bangladesh Operations, as one of the Top 10 Best Business Leaders in Bangladesh for 2023 by CEO Insights Magazine, India.

CBC Bangladesh also received a special commendation letter from the Central Bank of Bangladesh for fully disbursing the allocated stimulus package to the SME sector in 2022. Additionally, the Large Tax Payer Unit (LTU) of the National Board of Revenue (NBR), Bangladesh, recognised CBC Bangladesh with an award for being one of the highest taxpayers in the country.

Meanwhile, the Credit Rating Information and Services Ltd. (CRISL) rated CBC Bangladesh operations AAA for the 13th consecutive year based on the financial performance for 2022.

The progress of CBC Bangladesh operations in core banking areas over the past five years is given below:

Key Performances Indicators – Bangladesh Operations (based on management accounts)

Table - 23

Indicator	2023 BDT Bn.	2022 BDT Bn.	2021 BDT Bn.	2020 BDT Bn.	2019 BDT Bn.	5-Year CAGR (%)
Total deposits	96.917	71.243	64.959	50.997	45.363	22.44
Gross advances	64.002	51.56	58.111	55.039	47.450	10.73
Profit before tax	8.792	5.424	3.035	2.898	2.745	29.22
Profit after tax	4.663	2.954	1.744	1.709	1.697	27.07

Key Financial Ratios – Bangladesh Operations (based on management accounts)

Table - 24

Indicator	2023	2022	2021	2020	2019
Cost/Income ratio (%)	13.37	16.47	23.68	24.76	24.74
Net interest margin (%)	5.03	4.05	3.21	4.01	4.27
Profit per employee (BDT Mn.)	24.76	16.95	10.25	9.96	8.65
ROA (%)	6.71	5.61	3.20	3.46	3.53
ROE (%)	23.08	17.95	12.24	13.32	14.82

Subsidiaries and associate of the Group

Given below is a brief overview of the operations of the subsidiaries and the associate of the Bank.

Local subsidiaries

Commercial Development Company PLC (CDC)

Established in 1980 as the Bank’s inaugural subsidiary, CDC owns the Head Office building of Commercial Bank, known as “Commercial House,” along with two additional properties in Negombo and Tangalle. The Bank owns a 90% stake in CDC.

CDC stands as the sole listed subsidiary of the Group, boasting a market capitalisation of Rs. 1.341 Bn. as of the end of 2023 (2022: Rs. 1.146 Bn.). Its primary operations involve renting premises, hiring of vehicles, outsourcing non-core staff and offering various utility services to the Bank.

In 2023, CDC reported a post-tax profit of Rs. 294.060 Mn., recording an increase of 31.06% from Rs. 224.378 Mn. in 2022. The rise in profits was primarily attributed to increased fair value gains recognised on investment properties. Income from core business activities rose by 8.93% to Rs. 687.510 Mn. (2022: Rs. 631.128 Mn.), while the cost of sales increased by 29.62% to Rs. 420.758 Mn. (2022: Rs. 324.607 Mn.), mainly due to rising operating costs across various business lines. Consequently, the gross profit decreased by 12.97% to Rs. 266.753 Mn. (2022: Rs. 306.521 Mn.). However, the net finance income surged by 91.43% to Rs. 124.343 Mn. in 2023 compared to Rs. 64.956 Mn. in 2022. This led to a 15.12% increase in profit before tax to Rs. 461.971 Mn. in 2023 from Rs. 401.289 Mn. in 2022. The total assets of the Company stood at Rs. 4.326 Bn. as of the end of 2023, compared to Rs. 4.055 Bn. as of the end of 2022.

CBC Tech Solutions Limited

CBC Tech Solutions Limited, a wholly owned subsidiary of the Bank, specialises in providing Information Technology services and solutions to the Bank, its subsidiaries and to a few selected corporates. Its primary lines of business include offering IT support, supplying hardware and licensed software, providing network solutions, hardware and Point of Sale (POS) maintenance, software development and outsourcing professional and skilled manpower to the Bank and its subsidiaries.

Currently, the Company operates from five regional support centers located in Colombo, Galle, Kandy, Jaffna and Badulla, aimed at providing prompt and efficient services.

In 2023, the Company maintained its island-wide personal computer/server maintenance, troubleshooted POS machines and provided IT first-level technical support for the Bank. Additionally, it introduced Network Solutions as a new business line to enhance profitability. The software development unit completed numerous projects, devised customer-centric products and white-labeled two products to expand market penetration. Furthermore, the Company focused on upskilling its employees and outsourcing them to the Bank’s subsidiaries.

CBC Tech Solutions serves as an agent for Lenovo’s lineup of personal computers, tablets and accessories, featuring popular series such as IdeaPad, Yoga, Legion and ThinkPad. Notably, the Company was the pioneer in importing Lenovo Think Centre Neo desktop computers equipped with 12th generation Intel® Core™ processors. In recognition of its achievements, CBC Tech Solutions was honoured with the Best Reseller Award by Lenovo’s Sri Lankan distributor, IT Gallery Computers (Pvt) Limited, in 2023.

In 2023, CBC Tech Solutions achieved a notable revenue of Rs. 812.547 Mn., marking a significant growth of 25.50% from Rs. 647.408 Mn. in 2022, largely attributed to increased income from licensed software sales. The Company’s pre-tax profit also saw a substantial rise, reaching Rs. 228.546 Mn. compared to Rs. 186.761 Mn. in 2022, representing a growth of 22.37%. Despite a marginal increase in post-tax profit to Rs. 173.573 Mn. from Rs. 171.724 Mn. in 2022, primarily due to a rise in income tax rate to 30% for the year, (principal income sources being exempt from income tax in 2022), CBC Tech Solutions remains committed to becoming a leading provider of innovative ICT solutions in Sri Lanka, prioritising customer-centric products and services to drive technological advancements.

CBC Finance Limited (CBCF)

CBCF operates as a wholly-owned subsidiary of the Bank and functions as a Licensed Finance Company (LFC) under the Finance Business Act No. 42 of 2011. Formerly known as Serendib Finance Ltd, CBCF underwent a rebranding initiative to become CBC Finance Ltd, subsequently launching an assertive image-enhancing campaign. Additionally, the Company bolstered its governance framework and established synergies with its parent company, Commercial Bank of Ceylon PLC.

Despite challenging industry conditions affecting customers of all sizes, CBCF managed to increase its gross income for 2023 to Rs. 1.991 Bn., marking a 21.72% rise from Rs. 1.636 Bn. in 2022. However, the Company faced significant pressure on its cost of funds, resulting in a decrease in net interest income by 7.62% to Rs. 496.478 Mn. in 2023 from Rs. 537.406 Mn. in 2022. On a positive note, net fee and commission income surged by 184.55% to Rs. 117.393 Mn. from Rs. 41.256 Mn. in 2022, contributing to a total operating income of Rs. 688.283 Mn. for 2023 compared to Rs. 639.900 Mn. in 2022. Despite this, impairment charges and other losses soared to Rs. 481.616 Mn., up by 93.29% from Rs. 249.162 Mn. in 2022, due to prudent provisions made for high-risk segments of the portfolio. As a result, the Company’s net operating income decreased from Rs. 390.739 Mn. in 2022 to Rs. 206.667 Mn. in 2023. Total operating expenses also rose to Rs. 527.272 Mn. in 2023 from Rs. 351.847 Mn. in 2022, representing a 49.86% increase. Consequently, CBCF reported a net loss of Rs. 225.178 Mn. for the year, in contrast to the net profit of Rs. 39.583 Mn. reported in 2022.

The aggressive pursuit of deposits persisted amidst intense competition, resulting in the year-end portfolio reaching Rs. 6.534 Bn., up from Rs. 5.116 Bn. reported at the end of 2022.

Despite facing the challenge of expanding portfolios in an unprecedented market environment, the Company’s total assets rose to Rs. 12.457 Bn. from Rs. 10.954 Bn. at the end of 2022. Additionally, its net loans and advances portfolio grew to Rs. 10.142 Bn. by the end of 2023, compared to Rs. 8.505 Bn. at the end of 2022.

The Company enhanced its delivery channels by establishing branches in Jaffna and Kalutara, with plans to open an additional five branches in 2024 in key business areas to strengthen its presence. Moreover, it intends to relocate its Kiribathgoda, Dambulla and Negombo branches in 2024 to improve the customer experience.

Commercial Insurance Brokers (Pvt) Ltd (CIBL)

The Bank holds a 60% stake in CIBL, which primarily engages in insurance brokering for various insurance types through reputable life and general insurance companies in Sri Lanka.

In the year ended December 31, 2023, CIBL reported a post-tax profit of Rs. 43.603 Mn., marking a significant growth of 39.09% compared to Rs. 31.349 Mn. in 2022. Additionally, CIBL’s total assets increased to Rs. 815.257 Mn. as of December 31, 2023, compared to Rs. 758.701 Mn. in the previous year.

Local associate

Equity Investments Lanka Ltd. (EQUILL)

The Bank holds a 22.92% stake in EQUILL, a venture capital company operating for 33 years. EQUILL primarily invests in equity and equity-featured debt instruments. In 2023, EQUILL reported a net profit of Rs. 15.248 Mn., a notable improvement compared to the net loss of Rs. 6.695 Mn. reported in 2022.

Foreign subsidiaries

Commercial Bank of Maldives Private Limited (CBM)

In collaboration with Tree Top Investments (TTI), CBM was established in the Republic of Maldives as the Bank’s second foreign subsidiary. TTI brings essential local market expertise to the partnership, holding a 45% stake, while the Bank holds the majority stake of 55% in CBM. Founded in the latter part of 2016, CBM inaugurated its Head Office and first branch in the capital city, Malé. By the end of 2017, CBM expanded with its second branch in Hulhumale, totaling two branches and managed two Offsite Automated Teller Machines by the close of 2023.

As CBM continues to offer a wide range of financial services, its aim is to emerge as the premier financial institution in the Republic of Maldives, distinguished by its advanced technology, innovation and customer-centric approach. In its third year of operation, CBM received recognition for ‘Excellence in Finance’ in the Banking and Finance category at the 2019 Maldives Business Awards. Furthermore, CBM solidified its position by being ranked among the top 100 companies in the Maldives at the “Gold 100 Gala” events in both 2021 and 2023, organised by Corporate Maldives. In 2022, CBM was honoured with the Global Business Outlook Banking Award 2021 in the “Fastest Growing Commercial Bank - Maldives 2021” category.

In line with CBM’s dedication to community engagement and social responsibility, CBM proudly sponsored the Children’s Day celebration in partnership with Rehendi School. The event, held in June 2023, aimed to commemorate Children’s Day with a special focus on Rehendi School students and other children in the community. As part of its contribution, CBM provided essential stationary items as gifts, distributed among all participating children. This initiative not only supported the Children’s Day celebration but also highlighted CBM’s commitment to the overall development of youth in the community.

CBM remained dedicated to its corporate social responsibility efforts through a valuable partnership with Care Society Maldives, which prioritises financial literacy and supports individuals with unique needs. In collaboration with Care Society, known for their work with children with disabilities, CBM organised a financial literacy session for 15 participants. The session focused on age-appropriate financial education, covering topics such as responsible spending, managing money physically and online and recognising scams.

CBM envisions itself “to be the trusted financial service provider for growth, committed to delivering excellence in service quality”. Renowned for its technological advancement, innovation and customer-centric approach, CBM aims to be the premier choice for financial services in the Republic of Maldives.

In 2023, CBM achieved significant growth in its deposits and advances, with a 9.52% increase in deposits reaching MVR 2.785 Bn. (2022: MVR 2.542 Bn.) and a 22.23% increase in net loans and advances reaching MVR 0.949 Bn. (2022: MVR 0.776 Bn.). Total assets also saw remarkable growth, up by 10.98% to MVR 3.248 Bn. (2022: 2.927 Bn.) by the end of 2023. CBM reported a post-tax profit of MVR 78.264 Mn. in 2023, marking a 36.15% increase from the previous year and the highest profit recorded in its 7-year operation period.

CBC Myanmar Microfinance Company (CBC Myanmar)

CBC Myanmar, a fully owned subsidiary of the Bank, commenced operations in July 2018 with the opening of its Head Office and a branch in Lewe Township, Nay Pyi Taw. Initially focused on the Microfinance sector, the Company expanded its operations to Aye Lar, Zabuthiri and Pyinmana townships after securing a permanent business license in 2021. As business conditions improved, CBC Myanmar further expanded its presence to Tatkon township in the last quarter of 2023.

The Myanmar economy was forecasted to grow by 3% in 2023, rebounding from an 18% contraction in 2021 and following a growth of 3% in 2022.

At the beginning of the year, CBC Myanmar had 27.7% of its portfolio classified as Portfolio at Risk (PAR). Through consistent recovery efforts over the course of the year, the Company managed to reduce its PAR to 12.9% by the end of the year, compared to the industry PAR, which remained above 25%.

In November 2022, CBC Myanmar secured a credit facility of MMK 1.5 Bn. through United Amara Bank (UAB) of Myanmar, backed by a Standby Letter of Credit facility of USD 1 Mn. issued by the parent company. This arrangement enabled CBC Myanmar to maintain credit growth, as further capital infusion was not feasible at the time. Subsequently, the Company successfully negotiated a similar facility with UAB, with the loan proceeds earmarked for expanding its loan book.

During 2023, the Company disbursed MMK 7.1 Bn. in new loans, a significant increase from MMK 3.7 Bn. in 2022. This led to a growth in interest income from MMK 463.93 Mn. to MMK 905.53 Mn., representing a remarkable 95.18% increase compared to the previous year. Despite this positive development, the Company reported a loss of MMK 154.38 Mn. for the financial year ended December 31, 2023, an improvement from the loss of MMK 806.11 Mn. recorded in 2022, mainly due to an increase in operating expenses in 2023.

Overall, the Company achieved a substantial increase in interest income driven by improvements in portfolio quality and loan book growth. However, the Company’s break-even target was further delayed due to sharp currency depreciation, as a significant portion of its expenses are denominated in USD.

The Company remains optimistic that current conditions will gradually improve, potentially allowing it to enter the profit zone early in 2024. Additionally, the Company has plans to expand into another region with more branches to maintain its growth momentum.

Commex Sri Lanka S.R.L. (Commex)

Commex, a fully-owned subsidiary of the Bank, commenced its operations under the Authorised Payments Institute (API) license issued by the Bank of Italy in 2016. However, due to the economic impact of COVID-19, the Board of Directors of Commex decided to voluntarily liquidate the Company in 2022. The Bank made an announcement regarding this decision to the Colombo Stock Exchange. The process of voluntary liquidation is underway and nearing completion.

Detailed information about the Group’s companies and a summary of key financial information for each company is given in the section on “Group Structure” on pages 142 and 143.

Summary of Interim Financial Statements Income Statement – Group and Bank – 2023 and 2022

	1st Quarter ended March 31		2nd Quarter ended June 30				3rd Quarter ended September 30		4th Quarter ended December 31		For the Year ended December 31
	2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000			2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000
Group													Group
Net interest income	18,975,227	18,823,025	18,474,443	21,889,560			23,432,092	22,101,235	25,533,597	21,851,391	86,415,359	84,665,211	Net interest income
Net fee and commission income	5,402,176	4,087,687	5,188,782	4,789,815			5,618,955	5,035,555	6,177,406	6,256,044	22,387,319	20,169,101	Net fee and commission income
Other operating income (net)	909,546	11,333,380	1,569,631	8,308,652			6,879,193	7,468,511	3,908,752	4,691,792	13,267,122	31,802,335	Other operating income (net)
Less: Impairment and Other Losses	6,797,175	5,960,556	6,413,788	29,258,063			12,571,147	17,052,988	13,112,960	19,652,653	38,895,070	71,924,260	Less: Impairment and Other Losses
Net operating income	18,489,774	28,283,536	18,819,068	5,729,964			23,359,093	17,552,313	22,506,795	13,146,574	83,174,730	64,712,387	Net operating income
Less: Expenses	11,749,584	11,875,805	11,469,178	8,758,423			12,422,111	8,893,074	13,610,351	10,676,320	49,251,224	40,203,622	Less: Expenses
Operating profit	6,740,190	16,407,731	7,349,890	(3,028,459)			10,936,982	8,659,239	8,896,444	2,470,254	33,923,506	24,508,765	Operating profit
Add/(less): Share of profit/(loss) of associate, net of tax	1,245	(1,869)	1,107	(1,607)			1,546	1,220	(403)	(1,471)	3,495	(3,727)	Add/(less): Share of profit/(loss) of associate, net of tax
Profit before income tax	6,741,435	16,405,862	7,350,997	(3,030,066)			10,938,528	8,660,459	8,896,041	2,468,783	33,927,001	24,505,038	Profit before income tax
Less: Income tax expense	2,382,405	4,631,158	3,419,553	(433,112)			4,465,397	2,377,804	1,759,986	(6,470,284)	12,027,341	105,566	Less: Income tax expense
Profit for the period	4,359,030	11,774,704	3,931,444	(2,596,954)			6,473,131	6,282,655	7,136,055	8,939,067	21,899,660	24,399,472	Profit for the period
Quarterly profit as a percentage of the profit after tax of the year	19.9	48.3	18.0	(10.6)			29.6	25.7	32.6	36.6	100.0	100.0	Quarterly profit as a percentage of the profit after tax of the year
Cumulative quarterly profit as a percentage of the profit after tax of the year	19.9	48.3	37.9	37.6			67.4	63.4	100.0	100.0	–	–	Cumulative quarterly profit as a percentage of the profit after tax of the year
	1st Quarter ended March 31		2nd Quarter ended June 30				3rd Quarter ended September 30		4th Quarter ended December 31		For the Year ended December 31
	2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000			2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000	2023 Rs. ’000	2022 Rs. ’000
Bank													Bank
Net interest income	18,208,012	18,294,991	17,718,922	21,131,976			22,545,916	21,283,570	24,630,715	21,033,493	83,103,565	81,744,030	Net interest income
Net fee and commission income	5,205,619	3,962,233	5,020,730	4,618,230			5,471,251	4,882,230	5,860,594	6,028,575	21,558,194	19,491,268	Net fee and commission income
Other operating income (net)	949,028	11,355,289	1,539,808	8,308,491			6,860,424	7,484,902	4,098,472	4,504,448	13,447,732	31,653,130	Other operating income (net)
Less: Impairment charges and other losses	6,640,021	5,869,091	6,462,414	29,091,260			12,816,947	16,951,155	12,704,357	19,550,116	38,623,739	71,461,622	Less: Impairment charges and other losses
Net operating income	17,722,638	27,743,422	17,817,046	4,967,437			22,060,644	16,699,547	21,885,424	12,016,400	79,485,752	61,426,806	Net operating income
Less: Expenses	11,385,750	11,654,722	11,182,815	8,480,267			12,122,385	8,626,581	12,914,642	10,066,851	47,605,592	38,828,421	Less: Expenses
Profit before income tax	6,336,888	16,088,700	6,634,231	(3,512,830)			9,938,259	8,072,966	8,970,782	1,949,549	31,880,160	22,598,385	Profit before income tax
Less: Income tax expense	2,245,815	4,541,083	3,211,792	(557,428)			4,148,494	2,226,823	1,813,097	(6,581,884)	11,419,198	(371,406)	Less: Income tax expense
Profit for the period	4,091,073	11,547,617	3,422,439	(2,955,402)			5,789,765	5,846,143	7,157,685	8,531,433	20,460,962	22,969,791	Profit for the period
Quarterly profit as a percentage of the profit after tax of the year	20.0	50.3	16.7	(12.9)			28.3	25.5	35.0	37.1	100.0	100.0	Quarterly profit as a percentage of the profit after tax of the year
Cumulative quarterly profit as a percentage of the profit after tax of the year	20.0	50.3	36.7	37.4			65.0	62.9	100.0	100.0	–	–	Cumulative quarterly profit as a percentage of the profit after tax of the year

Statement of Financial Position – Group – 2023 and 2022

	1st Quarter		2nd Quarter			3rd Quarter		4th Quarter
As at	March 31, 2023 Rs. ’000	March 31, 2022 Rs. ’000	June 30, 2023 (Audited) Rs. ’000	June 30, 2022 (Audited) Rs. ’000		September 30, 2023 Rs. ’000	September 30, 2022 Rs. ’000	December 31, 2023 (Audited) Rs. ’000	December 31, 2022 (Audited) Rs. ’000	As at
Assets										Assets
Cash and cash equivalents	147,860,571	139,725,913	112,544,293	107,999,772		114,518,140	117,183,269	159,701,507	151,109,490	Cash and cash equivalents
Balances with Central Banks	95,653,467	87,849,345	61,871,953	51,501,124		37,516,912	60,156,210	62,633,503	78,597,120	Balances with Central Banks
Placements with banks	54,909,247	5,882,556	53,920,816	18,313,838		66,538,167	57,528,580	81,506,653	96,082,937	Placements with banks
Securities purchased under re-sale agreements	3,524,478	1,756,293	3,378,561	2,002,143		549,770	–	31,148,729	1,517,308	Securities purchased under re-sale agreements
Derivative financial assets	8,064,310	24,426,913	7,032,972	23,674,635		6,091,290	8,336,323	7,226,484	8,345,091	Derivative financial assets
Financial assets recognised through profit or loss – measured at fair value	28,922,409	25,090,307	50,791,983	54,201,704		98,042,540	42,638,708	29,449,653	24,873,057	Financial assets recognised through profit or loss/Held for trading – measured at fair value
Financial assets at amortised cost – Loans and advances to banks	–	–	–	–		–	–	–	–	Financial assets at amortised cost – Loans and advances to banks
Financial assets at amortised cost – Loans and advances to other customers	1,094,383,487	1,158,500,812	1,096,826,774	1,219,947,845		1,148,276,787	1,159,104,807	1,204,865,597	1,155,492,527	Financial assets at amortised cost – Loans and advances to other customers
Financial assets at amortised cost – Debt and other financial instruments	765,050,417	451,890,370	740,197,253	770,170,847		706,747,778	744,530,469	685,155,537	761,650,234	Financial assets at amortised cost – Debt and other financial instruments
Financial assets measured at fair value through other comprehensive income	186,912,374	316,414,558	230,826,265	71,383,043		246,477,855	108,526,607	287,732,972	118,652,257	Financial assets measured at fair value through other comprehensive income
Investments in subsidiaries	–	–	–	–		–	–	–	–	Investments in subsidiaries
Investments in associate	56,778	57,656	57,856	55,628		59,475	57,053	59,004	55,302	Investments in associates
Property, plant and equipment and right-of-use assets	27,492,933	25,535,145	26,649,043	25,830,332		26,538,514	25,881,016	28,997,246	27,446,607	Property, plant and equipment and right-of-use assets
Investment properties	326,350	72,400	424,550	72,400		545,850	72,400	597,825	80,350	Investment properties
Intangible assets	4,137,176	2,505,708	4,042,878	2,653,532		4,061,409	3,303,890	4,289,404	4,113,200	Intangible assets
Leasehold property	–	–	–	–		–	–	–	–	Leasehold property
Deferred tax assets	30,366,788	16,467,507	30,251,431	15,604,218		32,664,942	18,688,275	34,511,410	30,727,213	Deferred tax assets
Other assets	44,558,078	30,384,439	43,351,569	40,069,160		36,882,221	44,293,042	37,736,151	40,811,211	Other assets
Total assets	2,492,218,863	2,286,559,922	2,462,168,197	2,403,480,221		2,525,511,650	2,390,300,649	2,655,611,675	2,499,553,904	Total assets
Liabilities										Liabilities
Due to banks	42,905,385	78,825,477	50,020,369	64,607,923		48,268,948	65,021,690	47,948,578	64,971,170	Due to banks
Derivative financial liabilities	8,121,606	13,445,927	5,309,026	8,640,775		1,560,980	4,350,184	2,319,209	2,880,667	Derivative financial liabilities
Securities sold under repurchase agreements	96,322,359	168,475,481	133,588,179	214,906,611		117,895,187	129,659,272	111,186,824	97,726,435	Securities sold under repurchase agreements
Financial liabilities at amortised cost – due to depositors	2,023,418,699	1,706,467,472	1,958,690,813	1,756,807,475		2,038,498,641	1,853,469,051	2,147,906,858	1,977,743,661	Financial liabilities at amortised cost – due to depositors
Financial liabilities at amortised cost – other borrowings	10,837,010	32,042,811	11,481,198	30,611,911		13,243,625	20,905,990	12,756,021	16,150,356	Financial liabilities at amortised cost – other borrowings
Current tax liabilities	23,651,014	13,745,921	23,513,300	17,887,416		14,420,344	19,391,280	15,256,244	24,916,074	Current tax liabilities
Deferred tax liabilities	435,020	348,851	433,316	348,867		431,708	349,849	514,207	437,123	Deferred tax liabilities
Other liabilities	44,064,040	52,266,429	36,253,554	57,394,541		48,296,812	41,904,727	56,266,302	40,354,877	Other liabilities
Due to subsidiaries	–	–	–	–		–	–	–	–	Due to subsidiaries
Subordinated liabilities	33,487,710	45,117,068	33,262,957	50,868,395		24,869,883	50,935,604	36,482,939	61,400,967	Subordinated liabilities
Total liabilities	2,283,242,843	2,110,735,437	2,252,552,712	2,202,073,914		2,307,486,128	2,185,987,647	2,430,637,182	2,286,581,330	Total liabilities
Equity										Equity
Stated capital	62,891,772	58,149,621	62,891,772	58,149,621		62,948,003	58,149,621	62,948,003	58,149,621	Stated capital
Statutory reserves	12,079,670	10,590,338	12,079,670	10,590,338		12,079,670	10,590,338	13,586,534	12,079,670	Statutory reserves
Retained earnings	5,440,390	12,625,944	9,216,216	4,689,644		15,470,462	10,795,707	9,943,003	6,790,304	Retained earnings
Other reserves	124,736,413	91,496,084	121,617,007	124,232,206		123,309,743	120,834,984	133,993,167	131,845,571	Other reserves
Total equity attributable to equity holders of the Group	205,148,245	172,861,987	205,804,665	197,661,809		213,807,878	200,370,650	220,470,707	208,865,166	Total equity attributable to equity holders of the Group
Non-controlling interest	3,827,775	2,962,498	3,810,820	3,744,498		4,217,644	3,942,352	4,503,786	4,107,408	Non-controlling interest
Total equity	208,976,020	175,824,485	209,615,485	201,406,307		218,025,522	204,313,002	224,974,493	212,972,574	Total equity
Total liabilities and equity	2,492,218,863	2,286,559,922	2,462,168,197	2,403,480,221		2,525,511,650	2,390,300,649	2,655,611,675	2,499,553,904	Total liabilities and equity
Contingent liabilities and commitments	629,373,712	859,963,467	605,333,607	723,286,189		602,365,134	600,709,801	675,776,516	555,531,537	Contingent liabilities and commitments
Net assets value per ordinary share (Rs.)	156.18	139.43	156.68	159.43		162.70	161.62	167.77	168.47	Net assets value per ordinary share (Rs.)
Quarterly growth (%)										Quarterly growth (%)
Financial assets at amortised cost – loans and advances to banks & loans and advances to other customers	-5.29%	12.52%	0.22%	5.30%		4.69%	-4.99%	4.93%	-0.31%	Financial assets at amortised cost – Loans and advances to banks & loans and advances to other customers
Financial liabilities at amortised cost – due to depositors	2.31%	15.88%	-3.20%	2.95%		4.07%	5.50%	5.37%	6.70%	Financial liabilities at amortised cost – due to depositors
Total assets	-0.29%	15.28%	-1.21%	5.11%		2.57%	-0.55%	5.15%	4.57%	Total assets

Statement of Financial Position – Bank – 2023 and 2022

	1st Quarter		2nd Quarter			3rd Quarter		4th Quarter
As at	March 31, 2023 Rs. ’000	March 31, 2022 Rs. ’000	June 30, 2023 (Audited) Rs. ’000	June 30, 2022 (Audited) Rs. ’000		September 30, 2023 Rs. ’000	September 30, 2022 Rs. ’000	December 31, 2023 (Audited) Rs. ’000	December 31, 2022 (Audited) Rs. ’000	As at
Assets										Assets
Cash and cash equivalents	146,685,596	138,554,687	110,088,365	106,644,408		111,976,719	115,987,885	157,819,287	149,393,611	Cash and cash equivalents
Balances with Central Banks	84,945,804	81,086,848	53,719,053	45,197,919		27,819,813	50,225,992	52,817,502	66,493,499	Balances with Central Banks
Placements with banks	54,689,175	4,580,100	53,711,794	17,327,567		66,337,893	56,536,485	81,344,696	95,899,645	Placements with banks
Securities purchased under re-sale agreements	3,524,478	1,756,293	3,378,561	2,002,143		549,770	–	31,148,729	1,517,308	Securities purchased under re-sale agreements
Derivative financial assets	8,064,310	24,426,913	7,032,972	23,674,635		6,091,290	8,336,323	7,226,484	8,345,091	Derivative financial assets
Financial assets recognised through profit or loss – measured at fair value	28,922,409	25,090,307	50,791,983	54,201,704		98,042,540	42,638,708	29,449,653	24,873,057	Financial assets recognised through profit or loss – measured at fair value
Financial assets at amortised cost – Loans and advances to banks	–	–	–	–		–	–	–	–	Financial assets at amortised cost – Loans and advances to banks
Financial assets at amortised cost – Loans and advances to other customers	1,070,780,771	1,139,304,710	1,071,346,946	1,197,683,170		1,119,577,738	1,136,121,535	1,176,359,971	1,130,442,579	Financial assets at amortised cost – Loans and advances to other customers
Financial assets at amortised cost – Debt and other financial instruments	724,191,295	424,805,507	705,929,076	730,882,224		672,664,794	708,272,738	649,740,408	725,935,299	Financial assets at amortised cost – Debt and other financial instruments
Financial assets measured at fair value through other comprehensive income	186,131,686	315,781,767	230,097,911	69,648,186		245,702,748	106,976,948	287,023,009	117,056,240	Financial assets measured at fair value through other comprehensive income
Investments in subsidiaries	5,808,429	5,808,429	5,808,429	5,808,429		5,808,429	5,808,429	5,808,429	5,808,429	Investments in subsidiaries
Investments in associate	44,331	44,331	44,331	44,331		44,331	44,331	44,331	44,331	Investments in associate
Property, plant and equipment and right-of-use assets	25,502,884	23,719,230	24,608,919	23,872,579		24,415,513	23,852,100	26,257,902	25,425,452	Property, plant and equipment and right-of-use assets
Investment properties	–	–	–	–		–	–	–	–	Investment properties
Intangible assets	3,588,752	1,941,213	3,500,095	2,084,157		3,516,989	2,745,081	3,736,504	3,563,120	Intangible assets
Leasehold property	–	–	–	–		–	–	–	–	Leasehold property
Deferred tax assets	29,941,540	16,169,713	29,844,651	15,274,931		32,347,028	18,355,515	34,076,526	30,301,203	Deferred tax assets
Other assets	44,325,133	30,285,171	43,100,720	39,964,157		36,579,912	44,160,287	37,474,448	40,699,168	Other assets
Total assets	2,417,146,593	2,233,355,219	2,393,003,806	2,334,310,540		2,451,475,507	2,320,062,357	2,580,327,879	2,425,798,032	Total assets
Liabilities										Liabilities
Due to banks	43,057,367	78,898,400	49,463,863	64,643,031		47,554,766	65,126,753	47,274,361	65,130,061	Due to banks
Derivative financial liabilities	8,121,606	13,445,927	5,309,026	8,640,775		1,560,980	4,350,184	2,319,209	2,880,667	Derivative financial liabilities
Securities sold under repurchase agreements	96,467,167	168,582,810	133,599,880	215,162,077		117,912,371	129,837,305	111,198,516	97,726,435	Securities sold under repurchase agreements
Financial liabilities at amortised cost – due to depositors	1,957,874,217	1,660,680,484	1,900,074,880	1,696,848,972		1,976,214,831	1,792,802,024	2,085,046,149	1,914,359,494	Financial liabilities at amortised cost – due to depositors
Financial liabilities at amortised cost – other borrowings	10,837,010	32,042,811	11,481,198	30,611,911		13,243,625	20,905,990	12,756,021	16,150,356	Financial liabilities at amortised cost – other borrowings
Current tax liabilities	23,261,394	13,482,706	22,992,243	17,505,583		14,133,449	19,124,762	14,951,984	24,475,319	Current tax liabilities
Deferred tax liabilities	–	–	–	–		–	–	–	–	Deferred tax liabilities
Other liabilities	43,563,528	52,002,171	35,754,190	57,008,590		47,596,692	41,461,508	55,050,477	39,860,573	Other liabilities
Due to subsidiaries	79,101	86,493	76,893	115,191		61,483	96,295	317,221	115,484	Due to subsidiaries
Subordinated liabilities	33,487,710	45,117,068	33,262,957	50,868,395		24,869,883	50,935,604	36,482,939	61,400,967	Subordinated liabilities
Total liabilities	2,216,749,100	2,064,338,870	2,192,015,130	2,141,404,525		2,243,148,080	2,124,640,425	2,365,396,877	2,222,099,356	Total liabilities
Equity										Equity
Stated capital	62,891,772	58,149,621	62,891,772	58,149,621		62,948,003	58,149,621	62,948,003	58,149,621	Stated capital
Statutory reserves	11,352,858	10,204,368	11,352,858	10,204,368		11,352,858	10,204,368	12,375,906	11,352,858	Statutory reserves
Retained earnings	4,116,877	11,626,483	7,565,019	3,647,706		13,375,628	9,504,182	8,558,385	5,592,121	Retained earnings
Other reserves	122,035,986	89,035,877	119,179,027	120,904,320		120,650,938	117,563,761	131,048,708	128,604,076	Other reserves
Total equity attributable to equity holders of the Bank	200,397,493	169,016,349	200,988,676	192,906,015		208,327,427	195,421,932	214,931,002	203,698,676	Total equity attributable to equity holders of the Bank
Non-controlling interest	–	–	–	–		–	–	–	–	Non-controlling interest
Total equity	200,397,493	169,016,349	200,988,676	192,906,015		208,327,427	195,421,932	214,931,002	203,698,676	Total equity
Total liabilities and equity	2,417,146,593	2,233,355,219	2,393,003,806	2,334,310,540		2,451,475,507	2,320,062,357	2,580,327,879	2,425,798,032	Total liabilities and equity
Contingent liabilities and commitments	626,574,663	857,057,146	602,121,702	719,729,198		600,102,554	596,546,623	668,875,778	549,421,699	Contingent liabilities and commitments
Net assets value per ordinary share (Rs.)	152.57	136.33	153.02	155.60		158.53	157.63	163.55	164.30	Net assets value per ordinary share (Rs.)
Quarterly growth (%)										Quarterly growth (%)
Financial assets at amortised cost – loans and advances to banks & Loans and advances to other customers	-5.28%	12.29%	0.05%	5.12%		4.50%	-5.14%	5.07%	-0.50%	Financial assets at amortised cost – Loans and advances to banks & Loans and advances to other customers
Financial liabilities at amortised cost – due to depositors	-2.27%	15.08%	-2.95%	2.18%		4.01%	5.65%	5.51%	6.78%	Financial liabilities at amortised cost – due to depositors
Total assets	-0.36%	14.58%	-1.00%	4.52%		2.44%	-0.61%	5.26%	4.56%	Total assets

Decade at a glance

Bank			SLFRSs				SLFRSs			LKASs
As at December 31, Rs. Mn.	CAGR* (%)		2023	2022	2021		2020	2019	2018	2017	2016	2015	2014
Assets
Cash and cash equivalents			157,819	149,394	68,078		50,251	52,535	39,534	33,225	30,194	20,044	20,592
Balances with Central Banks			52,818	66,493	52,898		110,971	39,461	54,385	44,801	43,873	28,221	19,634
Placements with banks			81,345	95,900	11,585		15,939	24,527	19,899	17,633	11,718	17,194	14,508
Securities purchased under resale agreements			31,149	1,517	3,000		–	13,148	9,514	–	–	8,002	41,198
Derivative financial assets			7,226	8,345	3,245		2,637	1,831	7,910	2,335	1,053	4,118	460
Other financial instruments – Held for trading			–	–	–		–	–	–	4,411	4,988	7,656	6,327
Financial assets recognised through profit or loss – Measured at fair value			29,450	24,873	23,436		35,189	21,468	5,520	–	–	–	–
Loans and receivables to banks	12.77		–	–	–		–	–	–	641	624	601	551
Financial assets at amortised cost – Loans and advances to banks			–	–	–		780	758	763	–	–	–	–
Loans and receivables to other customers			–	–	–		–	–	–	737,447	616,018	508,115	405,431
Financial assets at amortised cost – Loans and advances to other customers			1,176,360	1,130,443	1,014,619		896,845	884,646	861,100	–	–	–	–
Financial investments – Held to maturity			–	–	–		–	–	–	63,563	60,981	–	–
Financial investments – Loans and receivables			–	–	–		–	–	–	48,712	51,824	57,724	50,436
Financial assets at amortised cost – Debt and other financial instruments			649,740	725,935	369,418		292,728	101,145	83,855	–	–	–	–
Financial investments – Available for sale			–	–	–		–	–	–	154,714	160,023	204,244	214,208
Financial assets measured at fair value through other comprehensive income			287,023	117,056	335,463		278,461	197,568	176,507	–	–	–	–
Total financial assets			2,472,930	2,319,956	1,881,742		1,683,801	1,337,087	1,258,987	1,107,482	981,296	855,919	773,345
Investments in subsidiaries			5,808	5,808	5,808		5,808	5,011	4,264	3,066	2,435	1,237	1,211
Investment in associate			44	44	44		44	44	44	44	44	44	44
Property, plant & equipment and right-of-use assets			26,258	25,425	23,075		23,212	20,507	15,301	14,635	10,308	9,969	9,953
Intangible assets			3,737	3,563	1,725		1,233	1,080	906	777	641	466	439
Leasehold property			–	–	–		–	–	72	73	74	74	75
Deferred tax assets			34,077	30,301	9,793		2,500	294	–	–	964	–	–
Other assets			37,474	40,699	27,024		19,620	23,323	23,911	17,297	16,439	12,096	10,543
Total assets	15.59		2,580,328	2,425,798	1,949,213		1,736,218	1,387,346	1,303,485	1,143,374	1,012,201	879,805	795,610
Liabilities
Due to banks			47,274	65,130	73,777		87,451	51,506	50,101	57,121	67,609	30,319	25,261
Derivative financial liabilities			2,319	2,881	2,092		1,501	1,495	8,022	3,678	1,515	1,891	1,193
Securities sold under repurchase agreements			111,199	97,726	151,912		91,438	51,220	49,104	49,677	69,867	112,385	124,564
Due to other customers/deposits from customers	16.54		–	–	–		–	–	–	850,128	739,563	624,102	529,361
Financial liabilities at amortised cost – Due to depositors			2,085,046	1,914,359	1,443,093		1,265,966	1,053,308	983,037	–	–	–	–
Other borrowings			–	–	–		–	–	–	23,786	9,270	9,986	11,637
Financial liabilities at amortised cost – Other borrowings			12,756	16,150	32,587		54,556	23,249	25,362	–	–	–	–
Current tax liabilities			14,952	24,475	9,294		6,778	4,968	6,566	4,144	3,441	3,002	1,998
Deferred tax liabilities			–	–	–		–	–	646	3,275	–	231	2,574
Other provisions			–	–	–		–	–	–	–	2	2	2
Other liabilities			55,050	39,861	33,211		33,038	30,497	24,208	19,225	17,710	15,547	17,444
Due to subsidiaries			317	115	49		97	54	41	75	20	26	19
Subordinated liabilities			36,483	61,401	38,303		38,247	37,887	37,992	25,166	24,850	11,973	11,045
Total liabilities			2,365,397	2,222,099	1,784,319		1,579,072	1,254,184	1,185,079	1,036,275	933,847	809,464	725,098
Equity
Stated capital			62,948	58,150	54,567		52,188	40,917	39,148	37,144	24,978	23,255	21,458
Statutory reserves			12,376	11,353	10,204		9,024	8,205	7,354	6,477	5,648	4,922	4,327
Retained earnings			8,558	5,592	9,028		7,596	5,144	5,063	4,987	4,464	4,389	4,258
Other reserves			131,049	128,604	91,094		88,338	78,896	66,841	58,491	43,264	37,775	40,469
Total liabilities and equity	15.59		2,580,328	2,425,798	1,949,213		1,736,218	1,387,346	1,303,485	1,143,374	1,012,201	879,805	795,610
Contingent liabilities and commitments			668,876	549,422	682,400		728,712	579,999	658,722	564,795	498,305	521,232	352,453

(*) CAGR – Compound Annual Growth Rate

Bank			SLFRSs				SLFRSs			LKASs
For the year ended December 31, Rs. Mn.	CAGR* (%)		2023	2022	2021		2020	2019	2018	2017	2016	2015	2014
Operating results
Gross income	16.37		335,770	275,444	160,886		149,711	148,706	138,049	114,357	93,143	77,868	72,753
Interest income			292,618	218,327	130,443		122,330	127,780	117,466	103,034	80,738	66,030	61,832
Interest expense			(209,515)	(136,583)	(65,832)		(72,759)	(80,571)	(72,524)	(64,011)	(47,915)	(35,685)	(34,610)
Foreign exchange profit			4,908	31,120	10,589		8,338	6,726	7,900	588	2,326	2,877	1,481
Net commission and other income			30,098	20,024	16,195		17,031	12,082	10,845	9,169	8,951	8,059	8,677
Operating expenses, impairment and taxes on financial services			(86,229)	(110,290)	(59,394)		(51,429)	(43,678)	(38,096)	(25,597)	(24,049)	(24,138)	(21,644)
Profit before tax	8.19		31,880	22,598	32,001		23,511	22,339	25,591	23,183	20,051	17,143	15,736
Income tax expense			(11,419)	372	(8,395)		(7,138)	(5,314)	(8,047)	(6,602)	(5,539)	(5,240)	(4,556)
Profit for the year	6.96		20,461	22,970	23,606		16,373	17,025	17,544	16,581	14,512	11,903	11,180
Ratios
Return on average shareholders’ funds (%)			9.78	12.46	14.66		11.28	13.54	15.56	17.88	19.52	16.90	17.01
Income growth (%)			21.90	71.20	7.46		0.68	7.72	20.72	24.10	19.62	7.03	0.96
Return on average assets (%)			0.82	1.05	1.28		1.05	1.27	1.43	1.54	1.53	1.42	1.60
Ordinary share dividend cover (times)			2.40	4.12	2.64		2.34	2.55	2.67	2.62	2.25	2.09	1.99
Advances to deposits and refinance (%)			60.33	63.30	73.54		72.96	86.74	86.96	86.07	82.69	80.84	75.89
Property, plant & equipment and intangible assets to shareholders’ funds (%)			13.96	14.23	15.04		15.56	16.21	13.75	14.46	14.07	14.94	14.85
Total assets to shareholders’ funds (times)			12.01	11.91	11.82		11.05	10.42	11.01	10.68	12.92	12.51	11.28
Capital funds to liabilities including contingent liabilities (%)			7.08	7.35	6.68		6.81	7.26	6.42	6.69	5.47	5.29	6.54
Cost/income ratio (%)			40.31	29.22	37.97		39.96	49.41	46.35	51.08	51.06	48.92	49.26
Liquid assets ratio – Consolidated (Sri Lankan Operations) (%)			46.06	35.88	N/A		N/A	N/A	N/A	N/A	N/A	N/A	N/A
Liquid assets ratio – Domestic Banking Unit (DBU) (%)			N/A	35.01	38.73		44.99	30.42	24.47	27.28	27.19	26.24	33.15
Liquid assets ratio – Offshore Banking Centre (OBC) (%)			N/A	32.37	36.39		32.70	25.25	30.20	30.95	30.19	49.13	31.43
(As specified in the Banking Act No. 30 of 1988)
Capital adequacy (%) (under Basel II ) Tier I			N/A	N/A	N/A		N/A	N/A	N/A	N/A	11.56	11.60	12.93
Tier I & II			N/A	N/A	N/A		N/A	N/A	N/A	N/A	15.89	14.26	15.97
Capital adequacy (%) (under Basel III)
Common equity Tier I capital ratio			11.44	11.39	11.92		13.22	12.30	11.34	12.11	N/A	N/A	N/A
Tier I capital ratio			11.44	11.39	11.92		13.22	12.30	11.34	12.11	N/A	N/A	N/A
Total capital ratio			15.15	14.66	15.65		16.82	16.15	15.60	15.75	N/A	N/A	N/A
Share information
Market value of a voting ordinary share (Rs.)			95.50	50.20	79.30		80.90	95.00	115.00	135.80	145.00	140.20	171.00
Earnings per share (Rs.)			16	17	19		15	17	17	17	16	13	13
Dividend per share (Rs.)			6.50	4.50	7.50		6.50	6.50	6.50	6.50	6.50	6.50	6.50
Price earnings ratio (times)			6	3	4		5	5	7	8	9	10	13
Net assets value per share (Rs.)			164	164	138		135	130	117	108	88	80	81
Earnings yield (%)			16	35	24		19	17	15	13	11	10	8
Gross dividends (Rs. Bn.) to ordinary shareholders			8.54	5.58	8.96		7.59	6.68	6.57	6.48	5.77	5.70	5.70
Dividend payout ratio (%) – Cash			29	–	22		32	27	26	26	28	33	35
Total dividend payout ratio (%)			42	24	38		46	39	37	38	40	48	50
Other information
Number of employees			5,201	5,121	5,072		5,057	5,062	5,027	4,982	4,987	4,951	4,852
Number of delivery points – Sri Lanka	1.41		271	269	268		268	268	266	261	255	246	239
Number of delivery points – Bangladesh			20	20	19		19	19	19	19	19	18	18
Number of automated teller machines	4.61		948	934	921		906	885	850	775	677	640	625

(*) CAGR – Compound Annual Growth Rate

 

Group structure

	Local Subsidiaries				Local Associate	Foreign Subsidiaries
	Commercial Development Company PLC	CBC Tech Solutions Ltd.	CBC Finance Limited	Commercial Insurance Brokers (Pvt) Ltd.	Equity Investments Lanka Limited	Commercial Bank of Maldives Private Limited	CBC Myanmar Microfinance Company Limited
Incorporated on	March 14, 1980 in Sri Lanka	February 17, 2003 in Sri Lanka	February 18, 1987 in Sri Lanka	August 17, 1987 in Sri Lanka	August 8, 1990 in Sri Lanka	March 24, 2015 in Maldives	April 4, 2017 in Myanmar	Incorporated on
Bank’s Holding	90.00%	100%	100%	60.00%	22.92%	55%	100%	Bank’s Holding
Principal Business Activities	Property development and provision of other utility services	Providing Information & Communication Technology (ICT) related products, services and solutions to corporate sector	Granting of leasing & hire purchase facilities, mortgage loans and other loan facilities. Accepting public deposits	Insurance Brokering	Venture Capital Financing	Banking	Microfinancing	Principal Business Activities
Business Address	4th Floor, No. 8-4/2, York Arcade Building, Leyden Bastian Road, Colombo 01.	“Commercial House”, No. 21, Sir Razik Fareed Mawatha, Colombo 01.	No. 187, Katugastota Road, Kandy.	No. 347, Dr Colvin R De Silva Mawatha, Colombo 02.	No. 108 A, 2/1, Maya Avenue, Colombo 06.	H. Filigasdhoshuge, Ameer Ahmed Magu, K. Male 20066, Maldives.	No. 15, Office Street, Ward 4, Lewe Township, Nay Pyi Taw, Myanmar.	Business Address
Contact Numbers	+94 11 244 7300	+94 11 257 4417	+94 81 220 0272	+94 11 760 0600	+94 11 250 7605 +94 11 537 3745 +94 11 537 3746	+96 0333 2668	+95 67 80 30566	Contact Numbers
Board of Directors								Board of Directors
Chairman	B R L Fernando	Prof A K W Jayawardane	S Muhseen	M P Jayawardena	M J C Amarasuriya	Ahmed Nazeer	K G D D Dheerasinghe	Chairman
Managing Director/ Chief Executive Officer	S C U Manatunge	P K A S K Gunawardhana	G A J C S Fernando	T D Thomas		E B Sooriyaarachchi	D K S S Piyaratne	Managing Director/ Chief Executive Officer
Chief Executive Officer	R N De Silva (*)	K Mediwake (*)		M G N Dharmasiri *	A H M Riyaz			Chief Executive Officer
Director	A L Gooneratne	K D N Buddhipala	L H Munasinghe	D M D K Thilakaratne	Deshamanya S E Captain	S C U Manatunge	D J D P Hettiarachchi	Director
Director	A T P Edirisinghe	K S A Gamage	M P Dharmasiri	U I S Tillakawardana	J D Peiris	S Prabagar	G Sivasubramaniam	Director
Director	L D A Jayasinghe	N Senaratna	D M D S S Bandara	D J D P Hettiarachchi	J B Abu Baker	U I S Tillakawardana	S Prabagar	Director
Director	U I S Tillakawardana		S M S C Jayasuriya	W M N S K Weerapana	W I Arambage	Dr Ibrahim Vishan		Director
Director	Dr R A Attalage			L W P Indrajith	K C Vignarajah	Ms Fareeha Shareef		Director
Director					M H Wijewaradene	Ms Aishath Zahira		Director
Director						J A D J C Nanayakkara		Director
Company Secretary	L W P Indrajith	M P Dharmasiri	Ms H D U O Gurnasekara	Ms Y A Kularathna	Mrs R R Dunuwille	Ms Aminath Nashadil	D K S S Piyaratne	Company Secretary

(*) Not a Board Member

 

Summary of financial information

		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.		2023 Rs. Mn.	2022 Rs. Mn.
Total assets		4,326.289	4,055.082		882.140	626.869		12,457.318	10,955.136		815.258	758.701		228.063	254.460		68,306.425	69,661.744		717.423	602.206		Total assets
Additions to property, plant and equipment		0.045	108.803		7.162	2.720		117.057	97.399		1.729	14.867		0.042	–		81.378	22.147		18.455	11.151		Additions to property, plant and equipment
Total liabilities		704.817	637.659		470.910	82.845		9,481.425	7,777.664		198.906	191.540		8.558	28.180		59,267.392	61,350.362		370.828	182.927		Total liabilities
Net assets		3,621.471	3,417.423		411.230	544.024		2,975.893	3,177.472		616.351	567.161		219.505	226.280		9,039.033	8,311.383		346.595	419.279		Net assets
Total revenue		687.511	631.128		812.547	647.407		1,991.470	1,636.161		172.236	139.075		49.952	24.697		4,057.234	3,408.935		156.575	92.660		Total revenue
Profit before tax		461.977	401.289		228.546	186.761		(320.605)	9.726		65.525	43.809		15.248	(16.263)		2,170.599	1,612.825		(24.299)	(138.585)		Profit before tax
Profit after tax		294.060	224.377		173.573	171.724		(225.178)	39.583		43.800	31.349		15.248	(16.263)		1,658.421	1,232.231		(24.022)	(137.619)		Profit after tax
Dividend per share (Rs.)		7.00	7.00		600.00	50.00		–	–		25.00	25.00		–	–		–	–		–	–		Dividend per share (Rs.)