Operating income grew by 4.7% to Rs 3,653 million despite net fee and commission income declining by 3.3% due to the impact of low oil prices on regional trade financing revenues and lower income from our capital market activities. Net interest income rose by 4.8% on the back of increased volumes of investment in Government securities while profit on exchange grew by a healthy 19.6%.

Growth in operating expenses was contained to 3.9%, leading to a slight reduction in the quarterly cost to income ratio to 42.9%. Net impairment charges of Rs 206 million for the quarter were up by 8.9% compared to the corresponding quarter of last year but on an annualised basis represented 48 basis points of our gross loan portfolio compared to 57 basis points as at 30 June 2016.

Our share of profit of associates rose by Rs 74 million following improved performance at the level of both BFCOI and PAD Group.

Shareholders’ funds of the Group increased to Rs 41.4 billion, with our capital adequacy ratio remaining comfortable at 18.2%, of which 15.4% in the form of Tier 1.

Outlook

On current trends, results for the semester to December 2016 are projected to improve on last year in spite of the difficult market conditions characterised by persisting high liquidity and restrained demand for credit amidst the still subdued investment level. While a relative improvement in the operating environment can be expected during the course of 2017, the pace thereof will be dependent on developments in the global economy as well as domestic public and private investment undertakings.

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