The Rs.405.5 million capital gain earned by the Commercial Bank of Ceylon PLC last May enabled the bank to boost its half year profit to Rs.2.26 billion, up 13.98% from a year earlier despite substantially higher provisioning, both general and specific, an interim statement now with shareholders reveals.

At group level, the attributable profit was up 5.5% to Rs.2.1 billion.

Once profit on commercial leasing was discounted from the bottom line the bank’s earning for the first half under review was marginally down at Rs.1.9 million

In a review of the six months ended June 30, 2008, the bank said that net provisions on account of bad and doubtful debts were up 78.4% during the year to Rs.795.7 million "mainly due to certain specific provisions made on vulnerable sectors in the first half of 2008."

Also, general provisions of Rs.282.7million had been made on performing and overdue loans and advances in the first half as required by the Central Bank’s provisioning requirements. This was up from Rs.245.7 million made a year earlier.

"The gross non-performing loans and advances ratio of the bank too rose to 5.23% as at June 30, 2008 from 3.02% as at December 31, 2007, mainly due to the adherence to the recent direction of the Central Bank of Sri Lanka on classification of loans and advances and also due to the prevailing macro economic environment in the country," the review said.

The bank summarized its strategy during the first half as one of "trimming our sails and staying on even keel."

Group net interest income was up 11.94% to Rs.6.07 billion while foreign exchange income was up 30.75% mainly due to higher gains realized from forward foreign exchange deals done this year, the review said.

Commercial Bank has a stated capital of Rs.9.54 billion, a statutory reserve of Rs.1.63 billion and other reserves of Rs.13.43 billion.

During the first half of this year the bank has opened two new branches growing its branch network to 174 and the number of employees to 3,960 from 3,745 a year earlier.

The first half earnings translated to an earning per share of Rs.8.90, up from Rs.7.79 a year earlier demonstrating 14.25% growth.

During the quarter ended June 30 the bank’s voting share traded at a high of Rs.140 and Rs.89.50 for the non-voting share while the lowest prices were Rs.125.25 for the voting share and Rs.80 for the non-voting.