NDB Group posts exceptional growth for the first nine months

The profit attributable to the shareholders of the NDB Group increased significantly by 50% over the corresponding period last year. The profit after tax and the profit before tax also increased significantly by 41% and 48% respectively over the corresponding period last year.

Eran Wickremeratne - CEO, NDB

This exceptional performance for the period was mainly due to the significant profits earned by NDB Bank. Both profit before tax and profit after tax for the NDB bank increased by 56% over the corresponding period last year. The financial conglomerate’s continuous excellent performance further substantiates the stability of the NDB Group in a highly volatile global and local economic environment.
NDB Bank’s core banking revenue (Net Interest Income (NII) and Other Income) grew by 35% over the corresponding period last year. The Bank’s core banking income includes Rs.708 mn of gains from the trading portfolio of government securities for the period as compared with Rs. 58 mn for the corresponding period last year.
The Bank’s core banking revenue, excluding the capital gains from government securities, increased by 16% over the comparative period of 2008. The NDB Bank’s NII grew significantly by 24% over the corresponding period last year. The Bank also earned an exceptional capital gain from the sale of shares during the period. Further, during the nine months ended September 30, 2009 NDB Bank was able to strengthen its liquidity position through a significant increase in customer deposits by 39% over December 31, 2008. NDB Bank remains the most well-capitalised bank among local banks with a Tier 1 Capital Adequacy Ratio of 13.63% and a Tier 1 & 2 Ratio of 16.37%, which is well in excess of the regulatory minimum of 10%.
Non-performing loans
The Bank’s prudent policies in maintaining the quality of its loan book, resulted in the ratio of Non-Performing Loans (NPLs) to the gross lending portfolio increasing to only 3.01% as at September 30, 2009 as compared to 2.30% as at December 31, 2008. It should be noted that NDB Bank’s NPL ratio remains one of the lowest in the local banking industry.
Following the recent Banking Act Direction No.9 of 2008 by the Central Bank of Sri Lanka, the criteria relating to the requirement to classify loans as NPLs were relaxed. However, NDB Bank opted to follow the earlier more stringent process in order to ensure the strict management of its loan book. In the event that NDB Bank followed the new NPL classification basis, the NPL’s would have declined to 2.97%.
The provision coverage ratio of the Bank as at September 30, 2009 was 70.8%, which is well above the industry average of 37.6%.
Operating costs
Overheads of the Bank increased by 10% over the corresponding period last year, but were kept in line with the budget, by adopting effective cost reduction methods during the year due to the adverse economic conditions that prevailed in the country. However, with new branches being opened in the North and East, it is expected that the overheads will increase further during the course of the year.
The Bank’s cost Income ratio excluding capital gains from trading in bills and bonds and shares was 42% for the period as compared to 45% for the corresponding period last year and 47% for the year ended December 31, 2008. Including such gains, the cost income ratio was 36% for the period as compared to 44% for the corresponding period last year and 46% for the year ended December 31, 2008. The Bank’s cost income ratio is one of the best amongst local banks. Branch expansion in North and East
With the dawning of a post-war era, Sri Lanka looks forward with much anticipation to the revitalisation of the economy. Towns in the North and East regions are now exposed to local businesses, which have expanded into these areas, opening new doors and opportunities to their inhabitants. In this backdrop, NDB Bank expanded its branch network to Jaffna, Batticaloa and Ampara and operations will begin soon in Trincomalee and Vavuniya.
NDB Bank’s investment in these new branches will provide the much needed access to finance for both small and medium enterprises and consumers alike. The Bank offers communities in the Northern and Eastern Provinces a wide-ranging portfolio of financial solutions in retail banking, corporate banking and SME, maintaining the highest standards of service and quality.
Communities across the North and East now have a rare opportunity to rebuild lives, reconstruct their homes, sustain a livelihood, pursue their education and build a better future. NDB Bank is proud to be a part of the reawakening of the Northern and Eastern Provinces by providing support to establish and promote entrepreneurial skills; offering them the Bank’s broader spectrum of financial products and services.
NDB Group’s local and regional growth
The NDB Group’s strategic investment arm, Capital Development and Investment Company PLC, a subsidiary of NDB Bank acquired a controlling interest of a direct and indirect shareholding representing 51% of the issued share capital of Eagle NDB Fund Management Company Limited (to be re-branded as NDB AVIVA Wealth Management) from Eagle Insurance Company PLC during the second quarter of 2009.
Accordingly, AVIVA International Holdings, through AVIVA NDB Finance Lanka (Private) Limited acquired an indirect stake of 49% of ENDB. Both NDB Group and ENDB clientele can now benefit from the synergies of this acquisition. Both existing and potential customers now have access to a wider selection of wealth management products that are designed for the local market; using global expertise, innovation and technology.
NDB Bank offers a wide range of commercial banking services through its growing island-wide branch network. In addition, as part of the NDB Group, its customers have access to the a full range of banking and financial services, including market driven and consumer-oriented retail banking, corporate banking, project finance, SME Lending, investment banking, stock brokering, insurance solutions and wealth management, making NDB a truly universal bank. NDB Bank also expanded its business operations in the region early this year by acquiring a controlling interest of 77.8% in an investment banking operation in Bangladesh, NDB Capital Limited. The group share of profits from the diversified group company investments increased by 16% over the corresponding period last year.
The Bank’s Fitch AA (lka) rating is amongst the best in the industry and reflects NDB Bank’s strong financial profile in terms of its capital base, profitability and asset quality; while the NDB Group has focussed on consolidation and maintaining high quality assets, while ensuring stability and a strong balance sheet. This has made the NDB Group one of the well-capitalised financial groups in Sri Lanka, poised for future expansion.