Financial Statements For the period ended 31st March 2014 DFCC VARDHANA BANK PLC Income Statement For the 3 Months ended 31.03.2014 31.03.2013 LKR '000 LKR '000 Income 2,440,013 2,349,378 Interest income Less: Interest expense Net interest income 2,177,585 1,471,277 706,307 2,184,217 1,365,860 818,357 174,851 4,169 170,681 148,310 1,448 146,862 Fee and commission income Less: Fee and commission expense Net fee and commission income Net gain from trading Net loss from financial instruments at fair value through profit or loss 32,519 16,464 (18,961) (91,734) Net gain from financial investments Other operating income (net) Total operating income 45,927 28,094 964,567 14,922 77,197 982,069 Less: Impairment for loans and other losses Individual impairment Collective impairment Net operating income 278,160 143,755 134,406 686,406 211,331 111,857 99,474 770,738 228,110 194,134 Less: Operating expenses Personal expenses Depreciation and amortisation Other expenses Operating profit before value added tax Less: Value added tax on financial services Operating profit before income tax Less: Income tax expense Profit for the period 49,504 43,074 293,447 115,345 25,598 89,747 34,294 233,013 300,518 43,497 257,021 83,137 55,453 173,884 0.20 0.79 Basic earnings per share (LKR) Statement of Comprehensive Income For the 3 Months ended 31.03.2014 31.03.2013 LKR '000 LKR '000 Profit for the period 55,453 173,884 Other comprehensive income Gains on re-measuring available-for-sale financial assets (11,624) (6,880) Other comprehensive income for the period (11,624) (6,880) Total comprehensive income for the period 43,829 167,004 Statement of Financial Position As at Assets Cash and cash equivalents Balances with Central Bank Placements with banks Derivative financial instruments Other financial assets- held for trading Loans and receivables to banks Loans and receivables to other customers Financial investments – available for sale Financial investments – held to maturity Property and equipment Intangible assets Other assets Total assets Notes 31.03.2014 LKR '000 31.12.2013 LKR '000 (Audited) 2,576,104 3,446,969 1,621,073 155,803 949,699 2,948,371 51,567,039 24,225,805 516,764 562,266 182,245 1,560,198 90,312,334 2,554,447 2,870,492 662,886 182,262 953,935 4,627,347 50,831,412 14,828,099 537,745 556,507 176,249 1,156,355 79,937,736 4,292,138 154,627 70,958,509 4,039,817 1,027,751 36,380 42,702 130,877 1,664,365 82,347,167 1,932,815 172,385 64,998,544 2,348,414 1,000,301 48,388 81,481 120,154 1,313,916 72,016,398 5,392,785 135,193 1,916,804 520,385 7,965,167 5,392,785 135,193 1,861,351 532,009 7,921,338 Total liabilities and equity 90,312,334 79,937,736 Off-balance sheet items and contra accounts Contingencies Commitments and contra accounts 15,477,450 12,846,872 14,520,155 12,627,713 897 136 867 135 Liabilities Due to banks Derivative financial instruments Due to other customers Other borrowings Subordinated term debts Group balances payable Current tax liability Deferred tax liability Other liabilities Total liabilities Equity Stated capital (284,177,007 ordinary shares) Statutory reserve fund Retained earnings Other reserves Total equity Memorandum information Number of employees Number of branches and extension offices 1 2 Statement of Changes in Equity Other reserves Balance as at 31.12.2012 Stated capital Statutory reserve fund Statutory investment fund Fair value reserve Retained earnings Total equity LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 3,182,519 103,971 264,840 20,144 1,569,077 5,140,551 Total comprehensive income for the period Profit for the 03 months ended 31st March 2013 Other comprehensive income Total comprehensive income for the period - - - (6,880) (6,880) 173,884 173,884 173,884 (6,880) 167,004 Transfers to reserves during the period - - 42,961 - (42,961) - Total transactions with equity holders - - 42,961 - (42,961) - Transactions with equity holders Balance as at 31.03.2013 3,182,519 103,971 307,801 13,264 1,700,000 5,307,555 Balance as at 31.12.2013 5,392,785 135,193 440,009 92,000 1,861,351 7,921,338 Total comprehensive income for the period Profit for the 03 months ended 31st March 2014 Other comprehensive income Total comprehensive income for the period - - - (11,624) (11,624) 55,453 55,453 55,453 (11,624) 43,829 - - - - - - Transactions with equity holders Transfers to reserves during the period Total transactions with equity holders Balance as at 31.03.2014 5,392,785 135,193 440,009 80,376 1,916,804 7,965,167 Statement of Cash Flows For the 3 months ended 31 March Cash flows from operating activities Interest and net commission receipts Interest payments Recovery of loans previously written off Receipts from other operating activities Cash payments to employees and suppliers Payment of retirement benefit obligation Value Added Tax and Nation Building Tax paid Operating cash flow before changes in operating assets and liabilities 2014 LKR '000 2013 LKR '000 1,886,103 (1,328,859) 150 238,018 (509,499) (1,798) (23,182) 260,933 1,757,766 (1,284,208) 2 84,251 (524,945) (37,953) (5,087) (576,476) (322,700) (307,270) (412,250) (3,005,974) (171,744) 5,779,702 8,700 50,815 268,642 5,162,346 (16,000) 5,146,346 3,744,314 62,615 41,299 61,378 314,551 (23,153) 291,398 (11,738,489) (851,353) 12,142 575,936 (61,259) (12,063,023) (736,156) (200,466) (111,850) 10,810 435,692 63 (19,177) (621,084) Cash flows from financing activities Increase / (decrease) in due to banks Increase in borrowing under repurchase agreements Net cash generated from financing activities 2,368,793 1,696,454 4,065,247 (1,272,469) 1,504,293 231,824 Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period (2,851,430) 7,048,620 4,197,190 (97,862) 4,881,219 4,783,357 2014 LKR '000 1,733,053 2,464,137 4,197,190 2013 LKR '000 2,614,300 2,169,057 4,783,357 Increase in operating assets Deposits held for regulatory or monetary control purposes Loans and receivables to other customers Increase in other assets Increase in operating liabilities Deposits from customers Derivatives financial instruments Negotiable certificates of deposit Increase in other liabilities Net cash generated from operating activities before income tax Income taxes paid Net cash generated from operating activities Cash flows from investing activities Purchase of financial investments - available for sale Increase in financial investments - held to maturity Increase in loans and receivables to banks Decrease in financial investments - held for trading Net proceeds from sale and maturity of financial investments Proceeds from sale of property and equipment Purchase of property, equipment and intangible assets Net cash used in investing activities Composition of cash and cash equivalent at end of the period Cash and cash equivalents Placements with banks Analysis of Financial Instruments by Measurement Basis As at 31 March 2014 Held for trading LKR'000 Assets Cash and cash equivalents Balances with central bank Placements with banks Derivative financial instruments Other financial assets -held for trading Loans and receivables to banks Loans and receivables to other customers Financial investments - available for sale Financial investments – held to maturity Total financial assets LKR'000 Available for Held to maturity sale LKR'000 155,803 949,699 - 2,576,104 3,446,969 1,621,073 2,948,371 51,567,039 - 24,225,805 1,105,502 62,159,554 24,225,805 Held for trading LKR'000 Liabilities Due to banks Derivative financial instruments Due to other customers Other borrowings Subordinated term debt Total financial liabilities Loans and receivables at amortised cost LKR'000 516,764 516,764 Total LKR'000 2,576,104 3,446,969 1,621,073 155,803 949,699 2,948,371 51,567,039 24,225,805 516,764 88,007,625 Total Amortised cost LKR'000 154,627 154,627 4,292,138 70,958,509 4,039,817 1,027,751 80,318,214 Held for trading Loans and receivables at amortised cost LKR'000 LKR'000 4,292,138 154,627 70,958,509 4,039,817 1,027,751 80,472,841 As at 31 December 2013 LKR'000 Assets Cash and cash equivalents Balances with central bank Placements with banks Derivative financial instruments Other financial assets held-for-trading Loans and receivables to banks Loans and receivables to other customers Financial investments - available for sale Financial investments – held to maturity Total financial assets 182,262 953,935 1,136,197 Held for trading LKR'000 Liabilities Due to banks Derivative financial instruments Due to customers Other borrowings Subordinated term debt Total financial liabilities 172,385 172,385 2,554,447 2,870,492 662,886 4,627,347 50,831,412 61,546,584 Available for Held to maturity sale LKR'000 14,828,099 14,828,099 Total Amortised cost LKR'000 1,932,815 64,998,544 2,348,414 1,000,301 70,280,074 LKR'000 1,932,815 172,385 64,998,544 2,348,414 1,000,301 70,452,459 LKR'000 537,745 537,745 Total LKR'000 2,554,447 2,870,492 662,886 182,262 953,935 4,627,347 50,831,412 14,828,099 537,745 78,048,625 Notes to the Financial Statements As at 1 1.1 31.03.2014 LKR'000 Loans and Receivables to Other Customers Gross loans and receivables (Note 1.1) Less: Individual impairment (Note 1.2.1) Collective impairment (Note 1.2.2) Net loans and receivables 54,644,052 1,743,152 1,333,861 51,567,039 54,330,900 2,307,712 1,191,776 50,831,412 Loans and Receivables to Other Customers - By product By product-Domestic Currency Overdrafts Trade finance Credit cards Pawning Staff loans Term loans 19,133,689 7,510,224 131,160 3,014,488 357,884 16,319,449 19,230,658 8,258,437 114,956 3,426,803 338,030 14,663,361 1,569,711 1,564,221 49,600,826 1,507,927 825,880 48,366,052 311,919 3,958,200 773,107 5,043,226 275,450 4,840,862 848,536 5,964,848 54,644,052 54,330,900 2,307,712 143,755 194,331 513,903 81 1,743,152 1,751,939 539,023 5,563 18,703 7,516 2,307,712 1,191,776 134,406 44,962 18,786 18,490 7 1,333,861 898,239 244,812 718 2,438 95,660 50,091 1,191,776 3,077,013 3,499,488 1,776,389 12,038,246 46,489,712 201,137 645,781 61,151,265 1,810,785 12,172,735 40,951,828 648,251 586,707 56,170,306 126,894 1,285,745 8,386,127 8,478 9,807,244 70,958,509 98,900 981,546 7,746,631 1,161 8,828,238 64,998,544 Lease rentals receivable Securities purchased under resale agreements By product-Foreign Currency Overdrafts Trade finance Term loans Gross Loans and Receivables 1.2 Movements in Individual and Collective Impairment during the period for Loans and Receivables to Other Customers 1.2.1 Individual Impairment Opening balance Add: Charge to income statement Exchange rate difference on foreign currency impairment allowance Adjustments / transfers Less: Write-off during the year Interest waivers Exchange rate difference on foreign currency impairment allowance Closing balance 1.2.2 Collective Impairment Opening balance Add: Charge to income statement Exchange rate difference on foreign currency impairment allowance Past due capitalisation of interest suspended Adjustments / transfers Less: Write-off of loans Interest waivers Exchange rate difference on foreign currency impairment allowance Closing balance Total impairment 2 31.12.2013 LKR'000 Due to Other Customers - By product By product-Domestic Currency Demand deposits (current accounts) Savings deposits Fixed deposits Margin deposits Certificate of deposits By product- Foreign Currency Demand deposits (current accounts) Savings deposits Fixed deposits Margin deposits Certificate of deposits Total 3. Accounting policies The accounting policies and methods of computations are consistent with those policies and methods followed during the previous financial year. 4. Comparative information Where items are regrouped, comparative information is also adjusted to conform to the 3 months ended 31 March 2014 presentation. 5. Events Occurring after the Statement of Financial Position Date Directors have recommended the payment of a final dividend of LKR 0.50 cents per share for the year ended 31 December 2013, which was approved by the shareholders at the Annual General Meeting held on 25 April 2014. No other circumstances or material events have occurred since the statement of financial position date, which require disclosure or adjustments to the financial statements. 6. In Pursuance of the policies announced by the Government encouraging consolidation of certain banking businesses, the Bank’s parent company DFCC Bank and NDB Bank made a joint disclosure to the Colombo Stock Exchange on 10 January 2014. Selected Performance Indicators As at 31.03.2014 As at 31.12.2013 Regulatory capital adequacy Core capital (Tier 1 capital) , LKR Mn 7,572 7,578 Total capital base, LKR Mn Core capital adequacy ratio, as % of risk weighted assets (Minimum requirement, 5%) 8,302 14.27% 8,304 14.57% Total capital adequacy ratio, as % of risk weighted assets (Minimum requirement, 10%) 15.65% 15.97% Gross non - performing advances ratio, % (net of interest in suspense) 6.77% 5.06% Net non - performing advances ratio, % (net of interest in suspense and provisions) 4.17% 2.29% Interest margin, % 3.37% 4.37% Return on assets (After tax) % 0.26% 0.88% Return on equity, % 2.83% 11.36% Domestic banking unit 26,839 20,321 Off-shore banking unit 1,114 1,215 39% 39% 34% 40% Asset quality (Quality of loan portfolio) Profitability Regulatory liquidity Statutory liquid assets, LKR Mn. Statutory liquid assets ratio, % (Minimum requirement, 20%) Domestic banking unit Off-shore banking unit CERTIFICATION: We, the undersigned, being the Chairman , the Chief Executive Officer and Head of Accounting and Reporting of DFCC Vardhana Bank PLC, Certify jointly that: (a) the above statements have been prepared in compliance with the format and definitions prescribed by the Central Bank of Sri Lanka; (b) the information contained in these statements have been extracted from the unaudited financial statements of the Bank unless indicated as audited. J M S Brito Chairman Date : 08.05.2014 Lakshman Silva Director & Chief Executive Officer Date: 08.05.2014 D S J Wettasinghe Head of Accounting & Reporting Date: 08.05.2014 DFCC Vardhana Bank PLC 73, W A D Ramanayake Mw, Colombo 02. Tel: 2371371 Fax: 2371372 Website: www.dfcc.lk
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