NSB continues to grow during first 9 months

Tuesday, 22 November 2011 01:39 - - {{hitsCtrl.values.hits}}

The National Savings Bank (NSB), the largest licensed specialised bank in Sri Lanka, showed a remarkable performance for the nine months ended 30 September 2011 under the stable macroeconomic conditions.

The Bank increased its net interest income by Rs. 1,377 million through prudent management of the interest earning assets and deposits.

Commenting on the performance NSB's GM/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 our market share in retail lending sector which is important to sustain the interest income over a period of medium to long term, added Bandara.

Operating expenses except for loan loss provisions showed a marginal inflation of 4% over the first nine months of 2010. The increase in costs was in line with the expansion of bank’s operations and general inflation in the economy. Further, the bank always implements innovative strategies which helps reduce the overheads and as a result the cost to income ratio was maintained at 44% (annualised and without VAT) level during the period.

The above sparkling performance was backed by the bank’s sound investment portfolio, of which 70% consists of risk free government securities. During the first nine months of 2011, the bank’s loans and advances portfolio increased by Rs. 15,415 million, while its nonperforming loan ratio was maintained at a level of 3.4 % during the period under review.

The bank mobilised Rs. 33,346 million for the first nine months of 2011 and as at 30 September 2011, the total deposit base stood at Rs. 388 billion. This is an increase of 9.4% over the last balance sheet date.

The bank complies with capital adequacy requirements (Basel II) where core capital and total capital ratios stood at 19% and 16% respectively as of end September 2011. The statutory liquid ratio of the bank stood at the 78% level, which is well above the requirement.

Fitch Ratings Lanka for the ninth consecutive year reaffirmed the AAA credit rating for the bank in September and NSB remains the only local bank to receive an AAA credit rating from Fitch Ratings.

Bandara concluded: “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.”