NDB bottom line up in 3Q but down for first nine months

National Development Bank Plc has seen its bottom line in the first nine months dip by 14% to Rs. 1.96 billion though the third quarter has experienced a gain.

The bank said for the quarter ended on 30 September 2016, profit attributable to equity holders amounted to Rs. 882 million, up from Rs. 884 million a year earlier and Rs. 535 million in Q2 and Rs. 548 million in Q1.

In a statement NDB said total operating income of the bank for the period under review was Rs. 9,339 million, an increase of 1% over the comparative period. Total operating income of the comparative period included a higher Group dividend earned by the bank compared to the current period. If such Group dividend is eliminated from the comparative period, the bank’s core banking operations have recorded a commendable growth with a 13% increase in the net interest income and 12% increase in net fee and commission income. The operating income for the bank excluding Group dividends was a 7% increase over the comparative period.

The Group total operating income was Rs. 9,980 million, which was a 4% growth over the comparative period, an equivalent of Rs. 367 million.

Within Group total operating income, net interest income (NII) was Rs. 6,532 million which recorded a commendable growth of 14%.NDB Group’s net fee and commission income recorded a marginal growth of 1%, despite the bank recording a 12% increase, which was negated by the reduced fee and commission income of the NDB Group’s capital markets cluster. 

The Group recorded a negative growth in net trading and other operating income, mainly attributable to the increase in the interest rates and the movement in exchange rates. Net gains from financial investments however grew by 11%. 

The Group recorded an impairment charge of Rs. 1,050 million for the first nine months of 2016 as compared to Rs. 545 million in the comparative period. The higher charge during the current period was due to the one-off specific provisions made for few customers, based on sound judgment and objective evidence as per the bank’s impairment policy.

Net operating income after impairment charges was Rs. 8,930 million, a marginal negative growth of 2% compared to the comparative period. Total operating expenses of the Group grew by 6% to Rs. 5,328 million. The Group has been able to contain its cost growth at stable levels over the year.

The Group’s balance sheet grew by 6% to close the first nine months at a total assets figure of Rs. 334 billion. This was an incremental asset growth of Rs. 19 billion over end December 2015 and Rs. 13 billion over the end of the first half of 2016. 

Within total assets, loans and receivables to customers grew by 6%, and increment of Rs. 12.6 billion over end December 2015. This growth in loans and receivables is satisfactory given the competitive interest rates and constrained liquidity conditions experienced in the industry.  The YoY loan growth was 15%. 

Furthermore, the bank has sustained its asset quality despite the volume increase, with only a marginal increase recorded in non-performing loans (NPL) ratio of 2.44% from 2.43% in December 2015.

Customer deposits grew by 5% to reach Rs. 193 billion over end December 2015. On a YoY basis, deposits grew by 14%. The CASA ratio of the bank by the end of Q3 was 23.2% and the improvement of the same remains a key strategic focus for NDB.

Group Tier I capital adequacy ratio by end Q3 2016 was 11.27% whilst total capital adequacy ratio was 15.35%, which are well above the regulatory minimum levels of 5% and 10% as specified by the Central Bank of Sri Lanka respectively.

Return on Average Shareholders’ Funds (ROE) for the Group was 8.98% for the first nine months of 2016. The ROE for the bank was 10.77%. However, if the Group dividend earned by the bank was eliminated, the ROE which reflects core banking operations would be 11.28%. The annualised earnings per share (EPS) for the Group was Rs. 15.89. The NDB share closed trading at 166.10 at the end of the quarter.

The bank opened its 103rd branch in Nattandiya during Q3, as a part of its strategic network expansion plan. The bank also increased its total ATM count to 113, which included 10 offsite ATMs spread across the country. The bank relocated several branches during the period under consideration with a bid to provide enhanced services to its customers. 

The Chief Executive Officer of NDB mentioned that the bank is reaching out to its customers via its multi-channel strategy, thereby enabling the customers’ convenient banking with NDB. He also mentioned that the bank’s mobile banking app which was launched this year will be further upgraded with more convenient features.

The Chairman of NDB emphasised that the bank is encouraged, and highly attuned to the emerging opportunities in the Sri Lankan economy. He also mentioned that the bank is privileged to be a part of this overall national growth thrust by providing meaningful banking services to the various sectors of the economy.