Merchant Bank of Sri Lanka & Finance : Quarterly Financial Statements of the Company and the Group for the quarter ended 30th September 2022

UNAUDITED

FINANCIAL STATEMENTS

For the Period ended 30th September 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		Nine months ended
9/30/2022	9/30/2021	Change	9/30/2022	9/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%

Group

	Quarter ended		Nine months ended
9/30/2022	9/30/2021	Change	9/30/2022	9/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%

	LKR '000	LKR '000		LKR '000	LKR '000			LKR '000	LKR '000		LKR '000	LKR '000
Income	1,818,157	1,408,870	29.1	4,752,684	4,259,184	11.6		2,073,630	1,500,886	38.2	5,251,796	4,520,941	16.2
Interest and similar income	1,657,202	1,301,920	27.3	4,661,339	4,015,504	16.1		1,742,512	1,318,937	32.1	4,828,723	4,067,998	18.7
Interest and similar expenses	1,430,997	658,991	117.1	3,216,620	2,045,447	57.3		1,425,468	661,448	115.5	3,214,302	2,049,974	56.8
Net interest income	226,205	642,929	(64.8)	1,444,719	1,970,057	(26.7)		317,044	657,489	(51.8)	1,614,420	2,018,024	(20.0)
Fee and commission income	26,702	45,540	(41.4)	98,337	120,068	(18.1)		33,048	44,121	(25.1)	102,937	115,631	(11.0)
Fee and commission expenses	1,171	7,885	(85.1)	17,017	26,824	(36.6)		(2,583)	3,092	(183.5)	4,253	13,417	(68.3)
Net fee and commission income	25,531	37,655	(32.2)	81,320	93,244	(12.8)		35,630	41,029	(13.2)	98,684	102,214	(3.5)
Insurance premium income	-	-	-	-	-	-		100,459	75,398	33.2	269,272	208,880	28.9
Net claims and benefits	-	-	-	-	-	-		(80,817)	(30,627)	(163.9)	(234,108)	(97,036)	(141.3)
Net trading income	16,083	(23,267)	169.1	1,110	(1,852)	160.0		16,083	(23,267)	169.1	1,110	(1,852)	160.0
Net gain/(loss) on financial instruments at fair value through profit or loss	97,333	36,073	169.8	(72,881)	7,204	(1,111.7)		98,929	36,584	170.4	(79,086)	7,154	(1,205.5)
Other operating income	20,838	48,604	(57.1)	64,779	118,261	(45.2)		82,599	49,113	68.2	128,839	123,131	4.6
Total operating income	385,989	741,994	(48.0)	1,519,048	2,186,913	(30.5)		569,927	805,719	(29.3)	1,799,132	2,360,514	(23.8)
Impairment charge/(reversal) from loans and other losses	(104,927)	162,669	(164.5)	90,130	310,420	(71.0)		(104,927)	162,669	(164.5)	90,130	310,420	(71.0)
Net operating income	490,917	579,325	(15.3)	1,428,918	1,876,493	(23.9)		674,854	643,050	4.9	1,709,002	2,050,094	(16.6)
Personnel expenses	317,458	289,376	9.7	1,010,958	875,229	15.5		367,657	330,922	11.1	1,151,544	997,424	15.5
Depreciation and amortisation	64,619	53,066	21.8	201,422	193,534	4.1		73,477	59,592	23.3	225,976	211,659	6.8
Other operating expenses	156,044	123,104	26.8	478,148	397,575	20.3		263,283	152,927	72.2	570,572	467,622	22.0
Total operating expense	538,121	465,545	15.6	1,690,527	1,466,337	15.3		704,417	543,441	29.6	1,948,093	1,676,705	16.2
Profit/(loss) from operations	(47,205)	113,780	(141.5)	(261,610)	410,156	(163.8)		(29,563)	99,610	(129.7)	(239,090)	373,389	(164.0)
Impairment charge/(reversal) from investment in Subsidiary companies	8,429	1,074	684.7	113,773	16,019	610.2		-	-	-	-	-	-
Impairment charge/(reversal) from investment in Associate companies	-	-	-	-	-	-		-	-	-	-	-	-
Profit/(loss) from operations after impairment from subsidiary investments	(55,633)	112,706	(149.4)	(375,383)	394,137	(195.2)		(29,563)	99,610	(129.7)	(239,090)	373,389	(164.0)
Value added tax (VAT) & Nation building tax (NBT) on financial services	24,399	52,597	(53.6)	86,753	165,225	(47.5)		24,399	52,597	(53.6)	86,753	165,225	(47.5)
Share of associate companies profit/(loss) before tax	-	-	-	-	-	-		21,016	33,547	(37.4)	47,310	75,448	(37.3)
Profit/(loss) before income tax	(80,033)	60,109	(233.1)	(462,136)	228,912	(301.9)		(32,946)	80,560	(140.9)	(278,534)	283,612	(198.2)
Income tax expense/(reversal)	(43,436)	18,350	(336.7)	(41,244)	46,872	(188.0)		(37,552)	27,744	(235.4)	(27,969)	67,997	(141.1)
Profit/(loss) for the period	(36,596)	41,758	(187.6)	(420,892)	182,041	(331.2)		4,606	52,816	(91.3)	(250,565)	215,615	(216.2)
Profit/(loss) for the period attributable to:
Equity holders of the parent	(36,596)	41,758	(187.6)	(420,892)	182,041	(331.2)		(3,543)	59,361	(106.0)	(260,967)	232,597	(212.2)
Non controlling interests	-	-	-	-	-	-		8,149	(6,545)	224.5	10,402	(16,983)	161.2
Profit/(loss) for the period	(36,596)	41,758	(187.6)	(420,892)	182,041	(331.2)		4,606	52,816	(91.3)	(250,565)	215,615	(216.2)
Earnings per share:
Basic/Diluted earnings/(loss) per share (LKR)	(0.07)	0.25	(128.2)	(0.48)	1.08	(144.2)		(0.01)	0.35	(101.9)	(0.30)	1.38	(121.4)

Merchant Bank of Sri Lanka and Finance PLC

3

Merchant Bank of Sri Lanka & Finance PLC

Unaudited Statement of Comprehensive Income

Company

Quarter ended		Nine months ended
9/30/2022	9/30/2021	Change	9/30/2022	9/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%

Group

	Quarter ended		Nine months ended
9/30/2022	9/30/2021	Change	9/30/2022	9/30/2021	Change
(Unaudited)	(Unaudited)	%	(Unaudited)	(Unaudited)	%

	LKR '000	LKR '000		LKR '000	LKR '000			LKR '000	LKR '000		LKR '000	LKR '000
Profit/(loss) for the period	(36,596)	41,758	(187.6)	(420,892)	182,041	(331.2)	4,606	52,816	(91.3)	(250,565)	215,615	(216.2)
Other comprehensive income/(expense) for the period
Actuarial gains/(losses) on defined benefit plans	-	-	-	86,084	-	-	-	-	-	86,084	-	-
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	-	1,250	(100.0)	(7,988)	1,250	(739.0)	(45,626)	(2,442)	(1,768.0)	(55,655)	(4,398)	(1,165.6)
Other comprehensive income/(expense) before tax	-	1,250	(100.0)	78,096	1,250	6,147.7		(45,626)	(2,442)	(1,768.0)	30,429	(4,398)	792.0
Deferred tax (charge)/credit relating to components of other comprehensive income	(41,321)	-	-	(20,660)	-	-	(41,321)	-	-	(20,660)	-	-
Other comprehensive income/(expense) for the period, net of tax	(41,321)	1,250	(3,405.6)	57,436	1,250	4,494.9	(86,947)	(2,442)	(3,459.8)	9,769	(4,398)	322.1
Total comprehensive income/(expense) for the period, net of tax	(77,917)	43,008	(281.2)	(363,456)	183,291	(298.3)	(82,340)	50,374	(263.5)	(240,797)	211,217	(214.0)
Total comprehensive income/(expense) attributable to:
Equity holders of the parent	(77,917)	43,008	(281.2)	(363,456)	183,291	(298.3)	(69,415)	58,624	(218.4)	(229,181)	230,808	(199.3)
Non controlling interests	-	-	-	0	-	-		(12,926)	(8,251)	(56.7)	(11,616)	(19,591)	40.7
	(77,917)	43,008	(281.2)	(363,456)	183,291	(298.3)	(82,340)	50,374	(263.5)	(240,797)	211,217	(214.0)

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	9/30/2022	12/31/2021	Change	9/30/2022	12/31/2021	Change
	(Unaudited)	(Audited)	%		(Unaudited)	(Audited)	%
	LKR '000	LKR '000			LKR '000	LKR '000
Assets
Cash and cash equivalents	521,436	1,191,374	(56.2)		735,876	1,436,435	(48.8)
Placements with banks & financial institutions	105,639	246,166	(57.1)		150,463	535,292	(71.9)
Financial investments at fair value through profit or loss	330,346	341,547	(3.3)		337,808	355,214	(4.9)
Loans & receivables at amortised cost	28,672,857	28,184,638	1.7		28,588,854	28,016,693	2.0
Financial investments at fair value through other
comprehensive income	18,610	1,989,169	(99.1)		1,645,066	3,415,338	(51.8)
Financial investments at amortised cost	4,225,170	-	-		4,225,170	-	-
Real Estate Stock	110,573	175,816	(37.1)		110,573	175,816	(37.1)
Investment in associate company	81,084	81,084	-		167,834	131,399	27.7
Investment in subsidiary	257,631	371,404	(30.6)		-	-	-
Investment properties	105,524	107,704	(2.0)		105,524	107,703	(2.0)
Property, equipment and right-of-use assets	535,085	607,185	(11.9)		671,354	742,708	(9.6)
Intangible assets	101,086	128,578	(21.4)		101,086	128,578	(21.4)
Deferred tax Assets	-	-	-		4,111	4,111	(0.0)
Other assets	201,341	852,795	(76.4)		509,316	1,220,370	(58.3)
Total assets	35,266,382	34,277,459	2.9		37,353,036	36,269,656	3.0
Liabilities
Due to banks	4,363,590	4,116,812	6.0		4,371,105	4,133,305	5.8
Due to customers at amortised cost	25,778,274	22,267,862	15.8		25,618,268	22,201,604	15.4
Debt issued and borrowed funds at amortised cost	25,883	2,381,579	(98.9)		112,543	2,381,579	(95.3)
Insurance provision - life	-	-	-		347,147	416,634	(16.7)
Insurance provision - non life	-	-	-		669,701	511,538	30.9
Current tax liabilities	84,097	178,898	(53.0)		84,097	178,898	(53.0)
Deferred tax liabilities	57,717	78,301	(26.3)		57,717	78,301	(26.3)
Other liabilities	909,199	764,118	19.0		1,308,386	1,269,913	3.0
Retirement benefits obligations	242,124	320,934	(24.6)		257,305	332,724	(22.7)
Total liabilities	31,460,884	30,108,504	4.5		32,826,270	31,504,496	4.2
Equity
Stated capital	4,276,448	4,276,448	-		4,276,448	4,276,448	-
Retained earnings	(783,315)	(427,847)	(83.1)		(444,639)	(251,498)	(76.8)
OCI reserve	(27,630)	(19,642)	(40.7)		(57,498)	(23,860)	(141.0)
Statutory reserves	339,996	339,996	-		339,996	339,996	0.0
Total equity attributable to the parent	3,805,499	4,168,955	(8.7)		4,114,307	4,341,086	(5.2)
Non controlling interests	-	-	-		412,459	424,075	(2.7)
Total equity	3,805,499	4,168,955	(8.7)		4,526,766	4,765,161	(5.0)
Total liabilities and equity	35,266,382	34,277,459	2.9		37,353,036	36,269,656	3.0
Commitments and contingencies	107,300	124,250	(13.6)		147,880	190,086	(22.2)
Net assets value per share (LKR)	7.25	7.95	(8.7)		7.84	8.28	(5.2)

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.)
Mr. A. M. A. Perera	Mr. M. P. R. Kumara
Director	Director
Colombo, Sri Lanka
09/Nov/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	-	-	-	182,041	182,041
Other comprehensive income	-	-	1,250	-	1,250
Issue of ordinary shares through right issue	2,151,991	-	-	-	2,151,991
Transaction cost related to rights issue	-	-	-	(923)	(923)
Balance as at 30th September 2021	4,276,448	234,613	3,825	(712,676)	3,802,210
Balance as at 01st January 2022	4,276,448	339,996	(19,642)	(427,847)	4,168,955
Net profit/(loss) for the period	-	-	-	(420,892)	(420,892)
Other comprehensive income	-	-	(7,988)	65,424	57,436
Balance as at 30th September 2022	4,276,448	339,996	(27,630)	(783,315)	3,805,499
	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	-	-	-	232,597	(16,983)	215,614
Other comprehensive income	-	-	(1,789)	-	(2,609)	(4,398)
Issue of ordinary shares through right issue	2,151,991	-	-	-	-	2,151,991
Transaction cost related to rights issue	-	-	-	(923)	-	(923)
Balance as at 30th September 2021	4,276,448	234,613	1,368	(482,419)	455,690	4,485,700
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	-	-	-	(260,967)	10,402	(250,565)
Prior year adjustment made to share of associate company profit	-	-	-	2,401	-	2,401
Other comprehensive income	-	-	(33,638)	65,424	(22,018)	9,769
Balance as at 30th September 2022	4,276,448	339,996	(57,498)	(444,639)	412,459	4,526,766

Merchant Bank of Sri Lanka and Finance PLC