Profits of Bank of Ceylon rose 32 percent to 2.83 billion rupees in the September 2011 quarter from a year earlier helped by better interest margins, while gross assets neared 800 billion rupees, interim accounts showed.

In the nine months to September profits rose 56 percent to 4.5 billion rupees, Lanka Business Online reported.

Interest income rose 14.7 percent to 15.5 billion rupees and interest expenses grew at a slower 13.5 percent to 9.2 billion rupees allowing the bank to grow net interest income by a faster 16.6 percent to 6.3 billion rupees.

Total performing loans grew 19.3 percent to 379 billion rupees 452 billion rupees from December to September 2011, and non-performing loans grew at a slower 1.6 percent to 13.7 billion rupees.

Loan loss provisions also fell 43 percent to 102 million rupees.

Non-interest income rose 2.1 percent to 3.4 billion rupees with better forex income making up for lower unspecified other income.

Value added tax on financial services fell 38 percent to 690 million rupees following a cut in the rate of tax. But corporate income rose 53 percent to 1.26 billion rupees.

The bank grew its deposits 7.5 percent to 569 billion rupees from December to September. Its gross assets grew 9.4 percent to 798 billion rupees almost touching 800 billion rupees.

Bank of Ceylon is Sri Lanka's largest bank by assets.

Its net assets grew 12.2 percent to 33.8 billion rupees.