Merchant Bank of Sri Lanka & Finance : Quarterly Financials as at 30.06.2022

UNAUDITED

FINANCIAL STATEMENTS

For the Period ended 30th June 2022

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		Six months ended
6/30/2022	6/30/2021	Change	6/30/2022	6/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Group

	Quarter ended		Six months ended
6/30/2022	6/30/2021	Change	6/30/2022	6/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%
LKR '000	LKR '000		LKR '000	LKR '000

Income		1,511,944	1,366,524	10.6	2,934,527	2,850,315	3.0		1,656,160	1,459,034	13.5	3,178,166	3,020,056	5.2
Interest and similar income	1,518,134	1,293,315	17.4	3,004,137	2,713,585	10.7	1,572,218	1,310,165	20.0	3,086,211	2,749,060	12.3
Interest and similar expenses		1,080,925	683,993	58.0	1,785,623	1,386,457	28.8		1,081,693	686,570	57.6	1,788,834	1,388,526	28.8
Net interest income	437,209	609,321	(28.2)	1,218,514	1,327,128	(8.2)	490,525	623,594	(21.3)	1,297,376	1,360,535	(4.6)
Fee and commission income	28,585	29,656	(3.6)	71,635	74,527	(3.9)	26,551	30,782	(13.7)	69,890	71,510	(2.3)
Fee and commission expenses		2,652	7,100	(62.7)	15,845	18,939	(16.3)		(2,398)	6,103	(139.3)	6,836	10,325	(33.8)
Net fee and commission income	25,933	22,556	15.0	55,789	55,588	0.4	28,949	24,679	17.3	63,054	61,185	3.1
Insurance premium income	-	-	-	-	-	-	93,338	73,613	26.8	168,814	133,482	26.5
Net claims and benefits	-	-	-	-	-	-	(86,822)	(27,899)	(211.2)	(153,291)	(66,410)	(130.8)
Net trading income	1,933	2,494	(22.5)	(14,972)	21,415	(169.9)	1,933	2,494	(22.5)	(14,972)	21,415	(169.9)
Net gain/(loss) on financial instruments at fair value through profit or loss	(54,835)	(140)	(39,188.7)	(170,214)	(28,870)	(489.6)	(57,247)	120	(47,741.9)	(178,016)	(29,431)	(504.9)
Other operating income		18,127	41,198	(56.0)	43,941	69,658	(36.9)		19,366	41,860	(53.7)	46,240	74,019	(37.5)
Total operating income		428,367	675,431	(36.6)	1,133,059	1,444,919	(21.6)		490,043	738,462	(33.6)	1,229,205	1,554,795	(20.9)
Impairment charge/(reversal) from loans and other losses		240,939	279,587	(13.8)	195,057	147,751	32.0		240,939	279,587	(13.8)	195,057	147,751	32.0
Net operating income		187,428	395,844	(52.7)	938,001	1,297,168	(27.7)		249,104	458,875	(45.7)	1,034,148	1,407,044	(26.5)
Personnel expenses	377,154	291,476	29.4	693,500	585,853	18.4	422,812	334,098	26.6	783,887	666,503	17.6
Depreciation and amortisation	68,094	73,160	(6.9)	136,802	140,468	(2.6)	76,074	80,839	(5.9)	152,499	152,067	0.3
Other operating expenses		178,927	140,566	27.3	322,104	274,471	17.4		182,955	167,779	9.0	307,289	314,695	(2.4)
Total operating expense		624,175	505,201	23.5	1,152,406	1,000,792	15.1		681,841	582,715	17.0	1,243,676	1,133,265	9.7
Profit/(loss) from operations	(436,747)	(109,358)	(299.4)	(214,405)	296,376	(172.3)	(432,736)	(123,840)	(249.4)	(209,528)	273,779	(176.5)
Impairment charge/(reversal) from investment in Subsidiary companies	105,345	9,567	1,001.1	105,345	14,945	604.9	-	-	-	-	-	-
Impairment charge/(reversal) from investment in Associate companies		-	-	-	-	-	-		-	-	-	-	-	-
Profit/(loss) from operations after impairment from subsidiary investments	(542,092)	(118,925)	(355.8)	(319,750)	281,431	(213.6)	(432,736)	(123,840)	(249.4)	(209,528)	273,779	(176.5)
Value added tax (VAT) & Nation building tax (NBT) on financial services	(19,281)	23,309	(182.7)	62,354	112,627	(44.6)	(19,281)	23,309	(182.7)	62,354	112,627	(44.6)
Share of associate companies profit/(loss) before tax		-	-	-	-	-	-		339	9,892	(96.6)	26,294	41,901	(37.2)
Profit/(loss) before income tax	(522,811)	(142,233)	(267.6)	(382,104)	168,804	(326.4)	(413,116)	(137,256)	(201.0)	(245,588)	203,053	(220.9)
Income tax expense/(reversal)	(46,115)	(21,678)	(112.7)	2,192	28,521	(92.3)	(45,991)	(18,908)	(143.2)	9,583	40,254	(76.2)
Profit/(loss) for the period		(476,696)	(120,555)	(295.4)	(384,296)	140,282	(373.9)		(367,125)	(118,348)	(210.2)	(255,171)	162,799	(256.7)
Profit/(loss) for the period attributable to:
Equity holders of the parent	(476,696)	(120,555)	(295.4)	(384,296)	140,282	(373.9)	(368,978)	(111,659)	(230.5)	(257,424)	173,236	(248.6)
Non controlling interests		-	-	-	-	-	-		1,852	(6,690)	127.7	2,253	(10,437)	121.6
Profit/(loss) for the period		(476,696)	(120,555)	(295.4)	(384,296)	140,282	(373.9)		(367,125)	(118,348)	(210.2)	(255,171)	162,799	(256.7)
Earnings per share:
Basic/Diluted earnings/(loss) per share (LKR)	(0.91)	(0.73)	(25.0)	(0.44)	0.27	(262.7)	(0.70)	(0.67)	(4.5)	(0.29)	0.33	(188.3)

Merchant Bank of Sri Lanka and Finance PLC

3

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Comprehensive Income

Profit/(loss) for the period

Other comprehensive income/(expense) for the period

Actuarial gains/(losses) on defined benefit plans

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

Company

Quarter ended		Six months ended
6/30/2022	6/30/2021	Change	6/30/2022	6/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%
LKR '000	LKR '000		LKR '000	LKR '000
(476,696)	(120,555)	(295.4)	(384,296)	140,282	(373.9)
88,554	-	-	86,084	-	-
(3,500)	-	-	(7,988)	-	-

Group

	Quarter ended		Six months ended
6/30/2022	6/30/2021	Change	6/30/2022	6/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%
LKR '000	LKR '000		LKR '000	LKR '000
(367,125)	(118,348)	(210.2)	(255,171)	162,799	(256.7)
88,554	-	-	86,084	-	-
1,520	(771)	297.0	(10,029)	(1,955)	(413.0)

Other comprehensive income/(expense) before tax	85,054	-	-	78,096	-	-		90,073	(771)	11,779.2	76,055	(1,955)	3,990.2
Deferred tax (charge)/credit relating to components of other comprehensive income	20,068	-	-	20,660	-	-	20,068	-	-	20,660	-	-
Other comprehensive income/(expense) for the period, net of tax	105,121	-	-	98,757	-	-	110,141	(771)	14,381.2	96,715	(1,955)	5,046.9
Total comprehensive income/(expense) for the period, net of tax	(371,575)	(120,555)	(208.2)	(285,539)	140,282	(303.5)	(256,984)	(119,119)	(115.7)	(158,456)	160,844	(198.5)
Total comprehensive income/(expense) attributable to:
Equity holders of the parent	(371,575)	(120,555)	(208.2)	(285,539)	140,282	(303.5)	(261,155)	(112,073)	(133.0)	(159,766)	172,185	(192.8)
Non controlling interests	-	-	-	-	-	-		4,171	(7,046)	159.2	1,310	(11,341)	111.6
	(371,575)	(120,555)	(208.2)	(285,539)	140,282	(303.5)	(256,984)	(119,119)	(115.7)	(158,456)	160,844	(198.5)

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	6/30/2022	12/31/2021	Change	6/30/2022		12/31/2021	Change
	(Unaudited)	(Audited)	%		(Unaudited)		(Audited)	%
	LKR '000	LKR '000			LKR '000		LKR '000
Assets
Cash and cash equivalents	875,591	1,191,374	(26.5)		1,267,472		1,436,435	(11.8)
Placements with banks & financial institutions	107,662	246,166	(56.3)		142,386		535,292	(73.4)
Financial investments at fair value through profit or loss	232,158	341,547	(32.0)		238,024		355,214	(33.0)
Loans & receivables at amortised cost	28,670,913	28,184,638	1.7		28,558,272		28,016,693	1.9
Financial investments at fair value through other
comprehensive income	18,610	1,989,169	(99.1)		1,531,308		3,415,338	(55.2)
Financial investments at amortised cost	4,085,785	-	-		4,085,785		-	-
Real Estate Stock	131,639	175,816	(25.1)		131,639		175,816	(25.1)
Investment in associate company	81,084	81,084	-		152,703		131,399	16.2
Investment in subsidiary	266,059	371,404	(28.4)		-		-	-
Investment properties	106,251	107,704	(1.3)		106,251		107,703	(1.3)
Property, equipment and right-of-use assets	562,591	607,185	(7.3)		694,329		742,708	(6.5)
Intangible assets	110,318	128,578	(14.2)		110,318		128,578	(14.2)
Deferred tax Assets	-	-	-		4,111		4,111	(0.0)
Other assets	297,130	852,795	(65.2)		673,236		1,220,370	(44.8)
Total assets	35,545,792	34,277,459	3.7		37,695,832		36,269,656	3.9
Liabilities
Due to banks	3,987,472	4,116,812	(3.1)		4,016,789		4,133,305	(2.8)
Due to customers at amortised cost	25,714,787	22,267,862	15.5		25,554,781		22,201,604	15.1
Debt issued and borrowed funds at amortised cost	546,549	2,381,579	(77.1)		662,943		2,381,579	(72.2)
Insurance provision - life	-	-	-		390,709		416,634	(6.2)
Insurance provision - non life	-	-	-		638,160		511,538	24.8
Current tax liabilities	178,897	178,898	(0.0)		178,897		178,898	(0.0)
Deferred tax liabilities	59,833	78,301	(23.6)		59,833		78,301	(23.6)
Other liabilities	926,170	764,118	21.2		1,321,735		1,269,913	4.1
Retirement benefits obligations	248,668	320,934	(22.5)		262,880		332,724	(21.0)
Total liabilities	31,662,377	30,108,504	5.2		33,086,727		31,504,496	5.0
Equity
Stated capital	4,276,448	4,276,448	-		4,276,448		4,276,448	-
Retained earnings	(705,399)	(427,847)	(64.9)		(399,776)		(251,498)	(59.0)
OCI reserve	(27,630)	(19,642)	(40.7)		(32,947)		(23,860)	(38.1)
Statutory reserves	339,996	339,996	-		339,996		339,996	0.0
Total equity attributable to the parent	3,883,415	4,168,955	(6.8)		4,183,721		4,341,086	(3.6)
Non controlling interests	-	-	-		425,385		424,075	0.3
Total equity	3,883,415	4,168,955	(6.8)		4,609,106		4,765,161	(3.3)
Total liabilities and equity	35,545,792	34,277,459	3.7		37,695,833		36,269,656	3.9
Commitments and contingencies	100,900	124,250	(18.8)		137,449		190,086	(27.7)
Net assets value per share (LKR)	7.40	7.95	(6.8)		7.98		8.28	(3.6)
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.)
W. P. R. P. H. Fonseka	Mr. A. M. A. Perera
Director	Director
Colombo, Sri Lanka
10/Aug/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 2021	2,124,457	234,613	2,575	(893,794)	1,467,851
Net profit/(loss) for the period	-	-	-	140,282	140,282
Other comprehensive income	-	-	-	-	-
Balance as at 30th June 2021	2,124,457	234,613	2,575	(753,512)	1,608,134
Balance as at 01st January 2022	4,276,448	339,996	(19,642)	(427,847)	4,168,955
Net profit/(loss) for the period	-	-	-	(384,296)	(384,296)
Other comprehensive income	-	-	(7,988)	106,745	98,757
Balance as at 30th June 2022	4,276,448	339,996	(27,630)	(705,399)	3,883,415
	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 2021	2,124,457	234,613	3,157	(714,093)	475,282	2,123,416
Net profit/(loss) for the period	-	-	-	173,236	(10,437)	162,799
Other comprehensive income	-	-	(1,052)	0	(903)	(1,955)
Balance as at 30th June 2021	2,124,457	234,613	2,105	(540,856)	463,941	2,284,260
Balance as at 01st January 2022	4,276,448	339,996	(23,860)	(251,498)	424,075	4,765,161
Net profit/(loss) for the period	-	-	-	(257,424)	2,253	(255,171)
Prior year adjustment made to share of associate company profit	-	-	-	2,401	-	2,401
Other comprehensive income	-	-	(9,086)	106,745	(943)	96,715
Balance as at 30th June 2022	4,276,448	339,996	(32,947)	(399,776)	425,385	4,609,106

Merchant Bank of Sri Lanka and Finance PLC