NDB records Rs 6.8 bn PBT for Q1-2013

National Development Bank PLC (NDB) continued its strong growth momentum by posting impressive results for Q1 2013 in the backdrop of intense competition which placed severe pressure on interest margins and posed many challenges to the banking industry during the first quarter.

Despite these challenges, NDB recorded a strong performance for the first quarter of 2013, posting a commendable Profit After Tax (PAT) of Rs. 6.2 bn to its shareholders, which is an increase of 387% compared to the corresponding period of last year.

Hemaka Amarasuriya	Russell De Mel

The Bank's Profit Before Tax (PBT) rose to Rs. 6.8 bn during the said period reflecting an increase of Rs. 5.1 bn (294%) over the PBT of Rs.1.7 bn for the quarter ended March 2012. The reported earnings of the Bank are mainly due to the significant growth in Net Interest Income of 21% and Equity Income of Rs. 5.3 bn. The Bank's PBT excluding the exceptional equity income of Rs 5.3 bn and the one off reversals of loan loss provisions made in the prior period, have recorded a growth of 4% over the prior period. In addition to this, costs saving strategic initiatives implemented by the Bank to eliminate non-value adding activities and streamline its internal processes have contributed positively towards improving the Core Banking Profits and setting the stage for a strong 2013.

The Bank continued to benefit from the group synergies and provides unique value proposition to its shareholders. The strategic disposal within the Group by selling the investment in AVIVA NDB Insurance PLC to American International Assurance Company Limited (AIA) of Hong Kong during the fourth quarter of 2012 earned impressive capital gains for NDB Capital Holdings PLC (NCAP) which is a subsidiary of the Bank.

Following the share buyback agreement that was entered into, NCAP, bought back its shares in March 2013 posting a Rs. 5.3 bn capital gain to the Bank's Equity Income.

The Group share of profits increased tremendously by 224% compared to March 2012 as a result of improved performance by NCAP. The NDB Investment Bank and NDB Stock Brokers recorded modest profits due to the prevailing slow moving and inactive capital market conditions in the first quarter.

The Bank's Earning per Share (EPS) of Rs. 43.52 indicates a significant increase of 145% over December 2012. The Bank's Return on Average Assets (ROA) and Equity (ROE) for the first quarter stood at 4.05% and 42.42% respectively due to the exceptional Equity Income of Rs. 5.3 bn.

The deposit base of the Bank grew by Rs. 20 bn compared to the corresponding period under review posting a 22% growth to reach Rs. 110 bn as at March 31, 2013. The Bank's newly introduced 'NDB Real Saver' account which offers a true savings proposition to its customers has been able to attract over Rs. 500 mn in deposits while inculcating the saving habit amongst all Sri Lankans.

The growth in loans and advances of the banking sector was at its lowest since end 2010, and thus comparative interest income earned dropped at a higher rate. Average Weighted Prime Lending Rate (AWPLR) has remained high and volatile in 2013, increasing the cost of borrowings to customers.

Despite these challenges, the Bank’s loans and advances portfolio increased to Rs. 119 bn as at March 31, 2013, an increase of Rs 13 bn, or 13% compared to March 2012. The NPLs to gross lending portfolio was 1.56% with a provision cover of 54% as at March 31 ,2013.

The NPL ratio of the Bank continues to remain healthy due to the prudent risk management practices adopted by the Bank and is well below the industry average. The liquidity position of the Bank is managed exceptionally well and the ratio of 24.69% (DBU) is well above the required statutory limit of 20%.

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