Yet another year of success for NSB
National Savings Bank had a productive year in 2011 in terms of
deposit growth, asset growth, profitability achievement of a number of
milestones, expansion of the branch network, re-launch of core products
and winning of local, regional and international accolade.
H M Hennayake Bandara |
Commenting on the bank's performance Hennayake GM/CEO said, “the
entirety of the bank's activities focused on one goal financial
inclusion, which is evident in the wide reach of branch network, the
add-on products and services as well as CSR activities. With 24 new
branches opened during the year, the bank concentrated more on the rural
areas. The bank also saw the opening of its 200th branch in
Medawachchiya and counted 210 branches by the end of 2011”.
Evaluating the financial performance of the bank he said that the
deposit base of the bank passed the Rs.400 billion mark in 2011 and
despite the tight liquidity position in the market during the fourth
quarter, the bank succeeded in mobilizing Rs.55.6 billion deposits
during the year recording a growth of 16%.
The NSB's total assets were up by 16% to Rs. 466 billion at December,
31 2011 compared with Rs.404 billion at the end of the FY 2010. The
increase in total assets reflected 25% growth in loans and advances to
customers reaching Rs.87 billion against Rs.70 billion at the end of the
FY 2010 and as a wholesale lender, the bank's corporate lending
portfolio recorded a significant growth of 168% to Rs.33 billion in the
FY 2011 compared to Rs.12 billon at the end of FY 2010. The government
securities portfolio recorded a growth of 15% to Rs.289 billion in FY
2011 from Rs.251 billion in FY 2010.
The net interest income (NII) marginally increased by 2% to Rs.16.9
billion in 2011 compared with Rs.16.6 billion for the year ended
December 31, 2010. The decrease of interest income from government
securities investments due to re-pricing at lower rates is the main
reason for lower growth in NII and decrease of lending rates due to
competitive pressure on lending pricing. However, strong growth in
corporate lending and lending to customers contributed to maintain the
NII at current level following the reduction in the cost of deposits
during the first nine months of 2011. As a result, Net Interest Margin (NIM)
declined to 3.9% for 2011 compared with 4.4% in 2010.
The bank's total operating expenses excluding provision for fall in
value in dealing securities marginally increased by 2% to Rs. 6. 02
billion for year ended December ,31 2011 compared with Rs. 5.89 billion
in FY 2010. The bank's operating profit from Ordinary Activities before
Tax declined by 8% to Rs. 8.95 billion compared to Rs. 9.78 billion in
the FY 2010. The significant increase in marked to market provision of
equity portfolio due to under performance of the share market was the
main reason for reduction in profit, in addition to increase in
operating expenses due to increase in costs associated with the business
expansion programme. However, net profit of the bank increased by 7% to
Rs. 5.76 billion against Rs. 5.39 billion in FY 2010 mainly due to the
reduction of tax rates. During the year the NSB has contributed Rs. 366
million to the Deposit Insurance Scheme of the Central Bank. The cost to
income ratio has improved to 42.2% in 2011 from 48.9% in the FY 2010;
cost management will continue to be a strategic priority in 2012.
Hennayake further said that the bank's capital position remains
strong and well above the Central Bank's required minimum level of 10%
with the total capital adequacy ratio at 17.1% as at December31 ,2011
compared with 19.2% at the end of 2010. Also statutory liquid asset
ratio of the bank stood at 74% by the end of FY 2011 compared to 81% at
the end of FY 2010 which is well above the minimum requirement of 20%.
Return on Assets (ROA)(before tax) declined to 2.1% in FY 2011 from 2.6%
at the end of 2010 which is mainly due to decline of NIM and provision
for fall in value of dealing securities.
The bank contributed to the government coffers by paying the
historically highest dividend of Rs. 3.21billion for FY 2011which is
more than 100% dividend payment.
The Group's operating profit from Ordinary Activities before Taxes
decreased to Rs. 9.08 billion recording a decline of 11% over the FY
2010, while profit after Tax for the period increased to Rs. 5.80
billion recording a growth of 4%.
Expressing his views of future prospects Hennayake said that the Sri
Lankan economy remains well positioned compared with global market
conditions and is forecast to perform strongly providing a positive
outlook for 2012. We expect to see continued domestic market growth,
albeit at a reduced level given continued global economic uncertainty.
“We will continue to focus on targeting new opportunities, diversifying
our income streams whilst maintaining a vigilant approach to balance
sheet management, asset quality and risk management”. |