NDB Bank continues growth momentum in 3Q

NDB Bank continued to make strong progress in widening its business base, by offering a comprehensive range of banking products to its corporate, SME and consumer customers in the third quarter.

The Group’s profit before tax for the period increased by 48% to Rs 2,309 mn from Rs 1,563 mn for the corresponding period last year after 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.

The Group’s profit attributable to shareholders was Rs 1,153 mn as compared with Rs 700 mn (an increase of 65%) excluding the exceptional capital gain.

For the Bank alone operating profit before provisions for the current period was 2,089 mn as compared with Rs 1,469 mn for the corresponding period last year, an increase of 42%.

The profit before tax increased by 24% from Rs 1,525 mn in 2006 to Rs 1,896 mn during the period while the profit after tax also increased by 17% over the corresponding period last year.

The profit after tax excluding equity capital gains of Rs 249 mn for the current period and exceptional group dividends of Rs 308 m during the corresponding period last year was Rs 776 mn as compared with Rs 586 mn, an increase of 32%.

Overall, the core banking revenue (net interest income, forex and commissions) of NDB Bank grew at a strong pace (35%) based on a significant growth in loans (21%) and deposits (48%) over the corresponding period last year.

The Bank now has 33 branches and one extension office, which act as distribution channels supporting the various business areas - Corporate banking, SME lending, retail banking, Investment Banking and Insurance.

The profit after tax of the Bank for the third quarter was Rs 263 mn as compared with Rs 448 mn for the corresponding quarter of the last year.

The main reason for the decrease was the exceptional group dividends of Rs 308 mn realised in the third quarter of 2006 and the general provisions of Rs 122 mn made during the current quarter.

If the above exceptional items are excluded from both quarters, the profit after tax for the third quarter of 2007 was Rs 360 mn compared with Rs 202 mn for the third quarter of 2006 (an increase of 78%).

The Bank has also diversified its avenues of fee income through Bancassurance, Western Union Money Transfer, etc.

NDB Bank together with Dialog Telekom has developed and launched South Asia’s first M Commerce programme, eZ Pay, a revolutionary method to make payments for goods, services and utility bills through the mobile phone anytime, anywhere in Sri Lanka. This development is expected to increase the customer base of both institutions.

During the last quarter of 2006, the Central Bank of Sri Lanka mandated a 1% provision on the performing portfolio of each Bank. The Banks have been given time to make this provision over ten quarters ending on March 31, 2009.

However the Bank has reached the 100% general provision requirement, which amounts to Rs 465 mn by 30 September 2007.

The quality of the loan portfolio is being maintained and as a result, the NPL ratio remained flat at 2% as compared with the year-end. This compares very favorably with the local banking industry norm.