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Banking
giant BoC finally comes to the Bourse
To
raise Rs. 5 billion in landmark rated listed debenture issue
In
a significant development that will boost capital markets,
the banking giant BoC is finally tapping the Colombo Bourse
to raise funds.
The Colombo Stock Exchange (CSE) has approved in principle
an application for a rated debenture issue worth Rs. 5 billion
by the Bank of Ceylon for listing on the Main Board.
BoC will issue 50 million unsecured subordinated redeemable
debentures and rated AA- by Fitch at Rs. 100 each.
The offer officially opens on October 23 but investors can
begin applying for debentures from today onwards. The manager,
sponsors and registrars to the issue is Merchant Bank of Sri
Lanka.
BoC’s Core and total capital adequacy ratios (CARs) stood
at 10.62% and 11.60% respectively at 2008 first half (under
the Basel II regime effective in FY08). In 2007 BoC reported
a capital position of Rs. 21 billion, an expansion of over
30% since 2005.
Fitch Ratings said that BOC continues to benefit from its
significant state sector exposure in calculating CARs. Supported
by an equity infusion of Rs. 1 billion and higher profit retention,
the bank’s equity position in terms of net NPL/equity
ratio improved to 20.0% at FYE07, but declined to 30.5% at
H108, reflecting the weakening economic environment.
The largest state owned financial services group with its
subsidiaries, BOC in 2007 reported a substantial uplift in
profit to Rs.5.2bln at the pretax level. Countering a turbulent
external environment, BoC financials show robust growth and
healthy improvement across all businesses.
If development activities undertaken across the country were
financed at commercial rates, reported pretax profit would
have increased to Rs.7.1 billion and the net profit would
rise to Rs.4.6 billion from the reported Rs.3.3 billion.
In the case of the parent bank, pre-tax profit amounted to
Rs.4.5 billion against Rs.4.1 billion reported in 2006 reflecting
a growth of 9 per cent. Adjusting for national development
activities would increase such profits to Rs.6.4 billion while
the net profit would rise from the reported Rs.2.8 billion
to Rs.4.2 billion.
The audited group financials reveal that profit before VAT
on financial services and income tax was Rs.7.1 billion for
2007, an increase of Rs.605 million or 9 per cent over 2006.
An increase in group tax liability to Rs.1.8 billion for 2007
from Rs.1.7 billion for 2006 resulted in a post tax profit
of Rs.3.3 billion reflecting a growth of Rs.304 million or
10 per cent over the previous year.
Aggregate revenues reported at Rs.50 billion for the bank
shows an increase of 43 per cent over 2006. This sharp increase
is derived mainly from interest income amounting to Rs.42
billion reflecting significant growth in interest generating
assets.
Total deposits of BoC crossed the Rs.300 billion milestone
to reach Rs.309 billion in 2007 as against Rs.263 billion
reported at end of the year 2006. Gross loans & advances
reached Rs.291 billion reflecting a 25 per cent growth from
Rs.233 billion in 2006.
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