NSB continues growth momentum

The National Savings Bank (NSB), the largest licensed specialized bank in Sri Lanka, showed a remarkable performance for the nine months ended September 30, 2011 under the stable macro economic conditions. The bank increased its net interest income by Rs. 1,377 million through prudent management of the interest earning assets and deposits.

Hennayake Bandara

Commenting on the performance of the bank CEO Hennayake Bandara said the Bank’s profit before VAT and income tax for the nine months ending of year 2011 recorded Rs. 8,883 million. Profit before VAT decreased by Rs. 1,320 million compared to the corresponding period in 2010 mainly due to the drop of capital gains. The low performance of equity market and increase in government securities yields have created a negative pressure on the bank’s equity and fixed income trading portfolios.

The post tax profit showed an increase of Rs. 750 million which is a 16% increase over the corresponding period in 2010. The banking sector enjoyed the positive effect of reduced VAT on financial services and income tax rates which resulted in increased profit after tax.

The group position further strengthened the profitability as the NSB Group recorded a profit after tax of Rs. 5,596 million which is an increase of 14% over the first nine months of year 2010. NSB has a statutory requirement to invest in government gilts for which the yield is comparatively low due to prevailing low interest rates. Therefore the bank, always executes new strategies to increase their market share in retail lending sector which is important to sustain the interest income over a period of medium to long-term, said Hennayake.

Operating expenses except for loan loss provisions showed a marginal inflation of 4% over the first nine months of 2010. “We will continue to maintain our focus on balance sheet management, credit quality, diversifying investments, risk management and skill development which we believe are the key ingredients in sustaining our business,” Hennayake said.