NDB Bank continues to strengthen its position in the market

CORPORATE RESULT: NDB Bank’s operating profit before provisions for the first quarter of 2007 was 492 Mn as compared with Rs. 385 mn for the corresponding period last year, an increase of 28%, which was achieved in a volatile interest rate environment.

Provisions for doubtful debts was a release in this quarter, due to the effective management of the credit portfolio and process.

However, the release of Rs. 32 mn for the first quarter of 2007 compares with a higher release of Rs. 94 mn in the comparable quarter of 2006. Accordingly, the profit before tax increased by a lesser percentage of 8% from Rs. 483 Mn to Rs. 523 mn.

Core banking performance reflected in these numbers indicates the continuing progress made by the Bank in implementing new business strategies after the merger between National Development Bank Ltd and NDB Bank Ltd on August 1, 2005.

The Bank now has 32 branches, which act as distribution channels supporting the various business areas, Corporate, SME, Consumer, Investment Banking and Insurance.

The Group’s profit before tax for the period was Rs. 660 mn as compared with Rs. 632 mn for the corresponding period last year excluding the exceptional capital gain of Rs. 1.01 Bn generated in the first quarter of 2006 on the sale of the controlling interest in Eagle Insurance Company Ltd. Group’s profit attributable to shareholders was Rs. 300 mn as compared with Rs. 314 mn excluding the exceptional capital gain.

Shareholders’ Funds as at March 31, 2007 amounted to Rs. 8.78 bn and Rs. 10.86 bn for the Bank and the Group respectively, which are well in excess of the regulatory minimum standards. The Tier 1 and Tier 2 capital for the Bank and the Group amounted to 14.89 % and 21.00 % respectively compared with the regulatory minimum of 10%.

The Net interest income of the Bank grew 19% from Rs. 560 mn in the first quarter of 2006, to Rs. 669 mn for the first quarter of 2007. This was mainly due to the significant increase in the gross lending portfolio of the Bank from Rs. 37.0 bn as at 31 March 2006 to Rs. 47.2 bn as at 31 March 2007. The total assets of the Bank grew from Rs. 52.8 bn as at 31 March 2006 to Rs. 67.5 Bn as at 31 March 2007, an increase of 28%.

Net other income of the Bank for the period was Rs. 233 mn as compared with Rs. 221 mn for the comparative period. This was mainly due to the steady increase in the commercial banking fee and commission income and forex income and as a result of the increased activity level of the Bank. Further the Bank has also diversified its avenues of fee income through Bancassurance, Western Union Money Transfer etc.