NDB continues strong growth momentum in Q3 2014

Monday, 17 November 2014 00:44 -     - {{hitsCtrl.values.hits}}

National Development Bank and its group companies posted a strong growth of 49% in profit attributable to shareholders, recording Rs. 3,276 million for the nine months ended 30 September 2014, as compared with the prior period. This impressive performance was due to growth in business volumes, effective management of portfolio quality and concerted cost management efforts carried out across the Group, keeping in line with the bank’s focused business strategy. The Group profit after tax for the nine months ended was Rs. 3,309 million which was a 50% growth over the comparative period, while profit before income tax was Rs. 4,422 million, which was a 34% growth. The Group total operating income increased by 16% to Rs. 9,673 million, strengthened by enhanced performance in core banking operations. The bank’s strategic business focus in managing its lending, investment and borrowing portfolios resulted in a 15% increase in net interest income of Rs. 5,781 million, over the prior period, despite narrowing interest spreads within the industry. Net fee and commission income also grew by 11% to Rs. 1,332 million. Net gains from trading and financial investments also contributed positively, towards the increase in overall operating income. Impairment charges for loans and other losses was Rs. 324 million for the nine months ended 30 September 2014 as compared to a provision charge of Rs. 226 million for 2013. The impairment provisions represent the bank’s sound judgment in assessing the fair value of the impaired loans, based on objective evidence of future recoveries and are in accordance with the bank’s stringent risk management policies. The Group Operating Expenses for the nine months was Rs. 4,305 million and recordedonly a 7% increase over the comparative period, amidst aggressive business expansions across the bank and its Group companies. Accordingly, the bank’s cost to income ratio continued to improve and was 44% as at 30 September 2014, which was well below that of the banking industry. The Group’s growth momentum continued with a healthy balance sheet growth of26% up to Rs. 261 billion as at 30 September 2014. Major contributors to the asset growth were loans and receivables and investments. The loans and receivables grew by 34% to Rs. 165 billion over the prior period, and by 20% over the year-end, which compares well with the industry growth levels. The bank’s Non-Performing Loan (NPL) ratio of 2.44%, which is one of the lowest in the industry, is testimony to the strong governance and risk management framework in which the Bank’s business model operates. The Bank’s customer deposits reached Rs. 151 billion which is a growth of 27% over the prior period and grew by 16% as compared with 31 December 2013.The CASA ratio of the bank increased to 26% as at 30 September 2014 and is a considerable improvement, given that the commercial banking part of the bank is less than a decade old. The improvement in the CASA ratio demonstrates the strong blueprint that the bank has set in the retail banking arena. Further strengthening its ties with international development funding agencies, NDB entered in to an agreement of Rs. 75 million with Proparco and FMO on 29 September. $ 60 million of these funds are to be infused by Proparco, the subsidiary of Agence Française de Développement of France and Rs. 15 million by its Dutch counterpart FMO, under a joint facility to support the financing of projects in the renewable energies, agro-industry and water supply sectors. NDB enjoys expertise perfected over decades in financing long-term projects. These funds to be received will strengthen NDB’s contribution to the respective sectors which are directly linked to the development of the bustling national economy. NDB Group’s capital adequacy ratios reflect a strong capital position. Tier I capital of the Group as at 30 September 2014 was Rs. 26,516 million with a Capital Adequacy Ratio (CAR) of 13.30%. Tier I and II capital was Rs. 36,330 million with a CAR of 18.22%. The NDB Group has been able to maintain one of the best capital adequacy ratios in the industry and has benefited from a capital base that has grown constantly and robustly. The Group Earnings Per Share (EPS) for the nine months ended 30 September 2014 was Rs. 27.26 with a 65% increase over 2013. Return on Shareholder Funds (ROE) was 16.57% and has increased by 54% from 2013. The share price of the bank closed at Rs. 257.50 on 30 September 2014 with a market capitalisation of Rs. 42.5 billion. The resultant Price Earning (PE) Ratio was 9.5 (times). NDB Chairman Sunil Wijesinha, reflecting on the concluded nine months, noted that the bank has recorded enhanced performance across all aspects of business in addition to commendable financial performance. The accolades won by NDB as the ‘Most Trusted Bank – Sri Lanka’ and the ‘Bank of the Year – Sri Lanka’ from the Acquisition International Magazine of United Kingdom for 2014 bear testimony to such enhanced performance. Chief Executive Officer Rajendra Theagarajah observed that the bank has achieved a more coherent, logical and strong model through focused strategic execution setting it on a solid platform for ambitious growth. The NDB Group is well poised for the remainder of the year, to deliver best in class results for all its stakeholders.