Merchant Bank of Sri Lanka & Finance : Quarterly Financial Statements for the quarter ended 31st December 2021

UNAUDITED

FINANCIAL STATEMENTS

For the Period ended 31st December 2021

Rating ICRA " [SL] BBB +

(Stable Outlook)"

Co.Reg.No. PQ10

2

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Profit or Loss

Company

Quarter ended		Twelve months ended
12/31/2021	12/31/2020	Change	12/31/2021	12/31/2020	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Audited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Group

	Quarter ended		Twelve months ended
12/31/2021	12/31/2020	Change	12/31/2021	12/31/2020	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Audited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Income		1,711,880	1,443,370	18.6	5,971,065	5,188,013	15.1		1,839,269	1,498,695	22.7	6,360,210	5,472,169	16.2
Interest and similar income	1,510,451	1,388,222	8.8	5,525,955	4,950,638	11.6	1,533,461	1,409,650	8.8	5,601,459	5,056,499	10.8
Interest and similar expenses		630,141	738,348	(14.7)	2,675,588	3,532,790	(24.3)		632,548	738,995	(14.4)	2,682,522	3,532,144	(24.1)
Net interest income	880,310	649,874	35.5	2,850,366	1,417,848	101.0	900,913	670,654	34.3	2,918,937	1,524,355	91.5
Fee and commission income	69,862	27,533	153.7	189,930	116,893	62.5	82,683	13,943	493.0	198,314	109,569	81.0
Fee and commission expenses		11,764	6,799	73.0	38,588	22,071	74.8		5,198	(9,171)	156.7	18,615	6,102	205.1
Net fee and commission income	58,098	20,734	180.2	151,342	94,822	59.6	77,485	23,114	235.2	179,699	103,467	73.7
Insurance premium income	-	-	-	-	-	-	79,723	42,482	87.7	288,603	178,408	61.8
Net claims and benefits	-	-	-	-	-	-	(40,946)	(36,067)	(13.5)	(137,982)	(101,585)	(35.8)
Net trading income	46,133	10,273	349.1	44,281	10,312	329.4	46,133	10,273	349.1	44,281	10,312	329.4
Net gain/(loss) on financial instruments at fair value through profit or loss	(30,639)	4,463	(786.5)	(23,435)	63,629	(136.8)	(27,238)	4,698	(679.8)	(20,085)	64,105	(131.3)
Other operating income		116,074	12,880	801.2	234,335	46,541	403.5		124,507	17,649	605.5	247,638	53,276	364.8
Total operating income		1,069,975	698,223	53.2	3,256,889	1,633,152	99.4		1,160,576	732,803	58.4	3,521,090	1,832,338	92.2
Impairment charge/(reversal) from loans and other losses		(235,970)	343,744	(168.6)	74,450	563,431	(86.8)		(235,970)	343,744	(168.6)	74,450	563,431	(86.8)
Net operating income		1,305,946	354,479	268.4	3,182,439	1,069,721	197.5		1,396,547	389,059	259.0	3,446,641	1,268,907	171.6
Personnel expenses	325,221	210,657	54.4	1,200,450	1,091,985	9.9	363,570	245,613	48.0	1,360,994	1,236,582	10.1
Depreciation and amortisation	51,581	72,199	(28.6)	245,115	291,273	(15.8)	60,772	75,744	(19.8)	272,431	305,392	(10.8)
Other operating expenses		216,286	167,664	29.0	613,860	571,882	7.3		281,622	182,327	54.5	749,244	674,777	11.0
Total operating expense		593,088	450,520	31.6	2,059,425	1,955,140	5.3		705,963	503,684	40.2	2,382,669	2,216,751	7.5
Profit/(loss) from operations	712,858	(96,041)	842.2	1,123,014	(885,419)	226.8	690,583	(114,625)	702.5	1,063,972	(947,844)	212.3
Impairment charge/(reversal) from investment in Subsidiary companies	-	536,122	(100.0)	16,019	462,544	(96.5)	-	-	-	-	-	-
Impairment charge/(reversal) from investment in Associate companies		-	-	-	-	(5,058)	100.0		-	-	-	-	-	-
Profit/(loss) from operations after impairment from subsidiary investments	712,858	(632,164)	212.8	1,106,995	(1,342,905)	182.4	690,583	(114,625)	702.5	1,063,972	(947,844)	212.3
Value added tax (VAT) & Nation building tax (NBT) on financial services	129,043	(21,024)	713.8	294,268	-	-	129,043	(21,024)	713.8	294,268	-	-
Share of associate companies profit/(loss) before tax		-	-	-	-	-	-		32,886	12,069	172.5	108,334	20,212	436.0
Profit/(loss) before income tax	583,815	(611,140)	195.5	812,727	(1,342,905)	160.5	594,427	(81,532)	829.1	878,038	(927,632)	194.7
Income tax expense/(reversal)	238,943	(234,600)	201.9	285,814	(234,600)	221.8	292,533	(18,551)	1,676.9	360,530	(18,550)	2,043.5
Profit/(loss) for the period	344,872	(376,540)	191.6	526,913	(1,108,305)	147.5	301,894	(62,981)	579.3	517,508	(909,082)	156.9
Profit/(loss) for the period attributable to:
Equity holders of the parent	344,872	(376,540)	191.6	526,913	(1,108,305)	147.5	332,682	45,186	636.2	565,280	(780,666)	172.4
Non controlling interests		-	-	-	-	-	-		(30,788)	(108,167)	71.5	(47,772)	(128,416)	62.8
Profit/(loss) for the period		344,872	(376,540)	191.6	526,913	(1,108,305)	147.5		301,894	(62,981)	579.3	517,508	(909,082)	156.9
Earnings per share:
Basic/Diluted earnings/(loss) per share (LKR)	1.33	(2.27)	158.6	2.03	(6.68)	130.4	1.28	0.27	371.1	2.18	(4.71)	146.3

Merchant Bank of Sri Lanka and Finance PLC

3

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Comprehensive Income

Company

Quarter ended		Twelve months ended
12/31/2021	12/31/2020	Change	12/31/2021	12/31/2020	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Audited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Group

	Quarter ended		Twelve months ended
12/31/2021	12/31/2020	Change	12/31/2021	12/31/2020	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Audited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Profit/(loss) for the period	344,872	(376,540)	191.6	526,913	(1,108,305)	147.5	301,894	(62,981)	579.3	517,508	(909,082)	156.9
Other comprehensive income/(expense) for the period
Actuarial gains/(losses) on defined benefit plans	59,658	(53,290)	212.0	59,658	(53,290)	212.0	61,143	(52,355)	216.8	61,143	(52,356)	216.8
Fair value reserves (Financial investments at fair value through other
comprehensive income):
Gains/(Losses) on re-measuring financial investments at fair value through other
comprehensive income	(23,467)	7,252	(423.6)	(22,217)	6,737	(429.8)	(26,741)	5,881	(554.7)	(31,139)	16,994	(283.2)
Share of associates companies' other comprehensive income	-	-	-	-	-	-	-	(679)	100.0	-	(679)	100.0
Other comprehensive income/(expense) before tax	36,191	(46,038)	178.6	37,441	(46,553)	180.4		34,402	(47,153)	173.0	30,004	(36,041)	183.2
Deferred tax (charge)/credit relating to components of other comprehensive income	(14,318)	14,921	(196.0)	(14,318)	14,921	(196.0)	(15,130)	14,921	(201.4)	(15,130)	14,921	(201.4)
Other comprehensive income/(expense) for the period, net of tax	21,873	(31,117)	170.3	23,123	(31,632)	173.1		19,272	(32,232)	159.8	14,874	(21,120)	170.4
Total comprehensive income/(expense) for the period, net of tax	366,745	(407,656)	190.0	550,036	(1,139,937)	148.3	321,166	(95,214)	437.3	532,382	(930,202)	157.2
Total comprehensive income/(expense) attributable to:
Equity holders of the parent	366,745	(407,656)	190.0	550,036	(1,139,937)	148.3	353,156	13,155	2,584.5	583,964	(806,955)	172.4
Non controlling interests	-	-	-	-	-	-		(31,990)	(108,369)	70.5	(51,582)	(123,247)	58.1
	366,745	(407,656)	190.0	550,036	(1,139,937)	148.3	321,166	(95,214)	437.3	532,382	(930,202)	157.2

Merchant Bank of Sri Lanka and Finance PLC

4

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Financial Position

		Company				Group
as at	12/31/2021	12/31/2020	Change	12/31/2021	12/31/2020	Change
	(Unaudited)	(Audited)	%		(Unaudited)	(Audited)	%
	LKR '000	LKR '000			LKR '000	LKR '000
Assets
Cash and cash equivalents	1,253,591	742,106	68.9		1,498,652	2,263,447	(33.8)
Placements with banks & financial institutions	183,949	299,746	(38.6)		479,333	778,598	(38.4)
Financial investments at fair value through profit or loss	341,547	950,012	(64.0)		355,214	960,328	(63.0)
Loans & receivables at amortised cost	28,184,638	26,785,517	5.2		28,016,693	26,548,397	5.5
Financial investments at fair value through other
comprehensive income	1,989,169	1,292,616	53.9		3,415,338	1,465,111	133.1
Financial investments at amortised cost	-	1,519	(100.0)		-	1,519	(100.0)
Real Estate Stock	175,816	330,188	(46.8)		175,816	328,824	(46.5)
Investment in associate company	81,084	81,084	-		173,106	95,106	82.0
Investment in subsidiary	371,404	387,424	(4.1)		-	-	-
Investment properties	107,704	114,370	(5.8)		107,704	114,370	(5.8)
Property, equipment and right-of-use assets	607,185	758,690	(20.0)		742,708	796,287	(6.7)
Intangible assets	128,578	146,493	(12.2)		128,578	148,909	(13.7)
Deferred tax Assets	-	52,760	(100.0)		4,111	102,065	(96.0)
Other assets	852,795	463,671	83.9		1,220,367	704,678	73.2
Total assets	34,277,459	32,406,196	5.8		36,317,619	34,307,639	5.9
Liabilities
Due to banks	4,116,813	5,436,682	(24.3)		4,133,305	5,442,511	(24.1)
Due to customers at amortised cost	22,267,862	21,725,261	2.5		22,207,862	21,665,256	2.5
Debt issued and borrowed funds at amortised cost	2,381,578	2,568,829	(7.3)		2,553,502	2,568,829	(0.6)
Insurance provision - life	-	-	-		416,634	498,767	(16.5)
Insurance provision - non life	-	-	-		511,538	488,784	4.7
Current tax liabilities	178,897	14,831	1,106.3		178,897	14,831	1,106.2
Deferred tax liabilities	78,301	-	-		78,301	-	-
Other liabilities	764,119	840,836	(9.1)		1,097,989	1,141,429	(3.8)
Retirement benefits obligations	320,935	351,906	(8.8)		332,724	363,816	(8.5)
Total liabilities	30,108,505	30,938,345	(2.7)		31,510,753	32,184,223	(2.1)
Equity
Stated capital	4,276,448	2,124,457	101.3		4,276,448	2,124,457	101.3
Retained earnings	(427,847)	(893,794)	52.1		(209,778)	(714,093)	70.6
OCI reserve	(19,643)	2,575	(862.9)		(23,499)	3,157	(844.3)
Statutory reserves	339,995	234,613	44.9		339,995	234,613	44.9
Total equity attributable to the parent	4,168,954	1,467,851	184.0		4,383,166	1,648,134	165.9
Non controlling interests	-	-	-		423,700	475,282	(10.9)
Total equity	4,168,954	1,467,851	184.0		4,806,866	2,123,416	126.4
Total liabilities and equity
34,277,459	32,406,196	5.8		36,317,619	34,307,639	5.9
Commitments and contingencies	102,400	124,250	(17.6)		137,867	190,086	(27.5)
Net assets value per share (LKR)	7.95	8.85	(10.2)		8.36	9.94	(15.9)

These Financial Statements are in compliance with the requirements of the Companies Act No. 7 of 2007
(sgd.)	(sgd.)
P. I. Kandanaarachchi	H. K. D. W. M. D. K. Hapuhinna
Head of Finance	Chief Executive Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
Approved and signed for and on behalf of the Board
(sgd.)	(sgd.)
H.P.K. Silva	W. P. R. P. H. Fonseka
Director	Director
Colombo, Sri Lanka
22/Feb/2022

Merchant Bank of Sri Lanka and Finance PLC

5

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Changes in Equity

	Stated	Statutory	OCI	Retained	Total
	capital	reserves	reserve	profits	equity
Company	LKR ' 000	LKR ' 000	LKR ' 000	LKR ' 000	LKR ' 000
Balance as at 01st January 2020	2,124,457	234,613	(4,162)	252,880	2,607,788
Net profit/(loss) for the Period	-	-	-	(1,108,305)	(1,108,305)
Other comprehensive income	-	-	6,737	(38,369)	(31,632)
Transfers to statutory reserve fund	-	-	-	-	-
Balance as at 31st December 2020	2,124,457	234,613	2,575	(893,794)	1,467,851
Balance as at 01st January 2021	2,124,457	234,613	2,575	(893,794)	1,467,851
Net profit/(loss) for the period	-	-	-	526,913	526,913
Other comprehensive income	-	-	(22,217)	45,340	23,123
Issue of ordinary shares through right issue	2,151,991	-	-	-	2,151,991
Transaction cost related to rights issue	-	-	-	(923)	(923)
Transfers to statutory reserve fund	-	105,383	-	(105,383)	-
Balance as at 31st December 2021	4,276,448	339,995	(19,643)	(427,847)	4,168,954
	Stated	Statutory	OCI	Retained	Non controlling	Total
	Capital	reserves	reserve	profits	interest	equity
Group	LKR ' 000	LKR ' 000	LKR ' 000	LKR ' 000	LKR ' 000	LKR ' 000
Balance as at 01st January 2020	2,124,457	234,613	(9,099)	105,118	598,529	3,053,618
Net profit/(loss) for the period	-	-	-	(780,666)	(128,416)	(909,082)
Acquisition, disposal and changes in non-controlling interest	-	-	-	-	-	-
Other comprehensive income	-	-	12,256	(38,546)	5,169	(21,120)
Transfers to statutory reserve fund	-	-	-	-	-	-
Balance as at 31st December 2020	2,124,457	234,613	3,158	(714,094)	475,282	2,123,416
Balance as at 01st January 2021	2,124,457	234,613	3,157	(714,093)	475,282	2,123,416
Net profit/(loss) for the period	-	-	-	565,280	(47,772)	517,508
Other comprehensive income	-	-	(26,656)	45,340	(3,810)	14,874
Issue of ordinary shares through right issue	2,151,991	-	-	-	-	2,151,991
Transaction cost related to rights issue	-	-	-	(923)	-	(923)
Transfers to statutory reserve fund	-	105,383	-	(105,383)	-	-
Balance as at 31st December 2021	4,276,448	339,995	(23,499)	(209,778)	423,700	4,806,866

Merchant Bank of Sri Lanka and Finance PLC