NDB Group profits increase

NDB Group's sustainable core banking profits increase by 34 percent in 2010, recording a Group Profit Attributable to Shareholders (PAS) of Rs 2 billion an increase of 28 percent, with a Group ROE of 13.67 percent, excluding exceptions.

With its roots in cashflow based project and infrastructure financing and having positioned as a licensed commercial bank just a decade ago, NDB Group is now on a springboard to leap into greater heights riding high on its competitive advantage - Knowledge based banking, the Bank said yesterday.

Chairman P M Nagahawatte	CEO Russell de Mel

Commenting on the 2010 performance, NDB Bank Chief Executive Officer Russell de Mel said the performance of the Bank as well as the Group during the previous year (2009) was highlighted by significant capital gains made from trading in Treasury Bills and Bonds which was influenced by falling interest rates and also by one off equity gains.

"Our philosophy is that whilst we seize these opportunities, thus maximising gains and returns, what is important is to sustain the core banking profits."

Therefore, in 2010 the Bank attempted to create a strong business model by improving its core banking income that is sustainable in the long run," he said.

The unprecedented portfolio growth of 27 percent, with loan delinquencies maintained at an all time low of 1.9 percent, one of the lowest in the Industry, healthy and well structured balance sheet, and an affirmed rating of 'AA (lka)' by Fitch Ratings provides its stakeholders the much desired comfort of their investment and future growth potential.

In fact the loans to total assets ratio which increased by 10 percent to 68 percent in 2010, makes it evident that the new loans created with the liquid funds will now reap higher returns. Today the Group is positioned as a unique knowledge hub, with its presence in Banking, Capital Markets and Insurance. Backed by a well trained team of professionals, the Group was able to leverage its core competencies to take advantage of emerging opportunities in lending as well as capital markets and insurance that witnessed a most welcome 'bounce back' during the year 2010.

Though on an as is basis, the Bank's Profit Before Tax of Rs 3.4 billion, which is almost flat against 2009, reflects a drop of 6 percent at profit after tax level due to substantial capital gains of 2009 which were exempt from tax. It is worthy to note that there has been significant improvement in the core banking profits throughout the quarters as well, which has had a direct impact on the improvement in the full year returns, thus confirming that its core business is sustainable under the emerging economic conditions.

Despite falling interest rates and higher returns on alternate investments the Bank's deposit base recorded a healthy growth of 19 percent from Rs 49 billion to Rs 59 billion during the year against an industry growth of 15.6 percent. It is noteworthy that the Bank's Current and Savings Accounts (CASA) ratio has also improved from 23 percent to 29 percent with the build up of granular savings and cash management offerings.

On a quarterly basis, both the lending portfolio as well as the deposit portfolio has shown significant growth potential during the fourth quarter.