● DFCC Bank's (DFCC) net profit has grown by a sharp 73.7% YoY to LKR823.0 mn in 2QFY20/10 largely due to a 101.8% YoY growth in Treasury interest income, 3.6% YoY dip in interest expenses, 2.7% YoY reduction in operating costs and a 20.4% YoY slide in provisioning cost.
● The strong growth reported in the 2nd quarter, has weathered the marginal YoY negative growth in 1QFY2010 whilst the 1HFY2010 net profit has increased by 31.7% YoY to LKR1,302.8 mn.
● Nevertheless we believe the outlook to be positive with NPL's to peter out (supported by an overall recovery in the broad economy), loan growth to pick up whilst maintaining spreads of +4.5% and also benefit from strong deposit mobilization (suppoted by 74 branches)
● DFCC has locked up further value by owning 27.11% of COMB, the investment which is presently carrying an unrealized gain of around LKR28 per share
● Forecast FY2010 net profit maintained at LKR2,391 mn (+16.9% YoY) whilst projected FY2011 earnings revised up 5.5% to LKR2,797 mn (+17% YoY)
● The share continues to be good value trading on 8.1X expected FY2010 EPS, 6.8X forecast FY2011 EPS and 0.96X PBV
SRI LANKA EQUITY ANALYTICS
World Trade Center
Colombo
Sri Lanka
Email: sriventure@gmail.com
Web: www.srilankaequity.com
Saturday, November 7, 2009
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