Fourth largest NBFI CDB poised for takeoff with 55% PAT growth in 23/24

Wednesday, 29 May 2024 01:50 -     - {{hitsCtrl.values.hits}}

  • Achieves Rs. 2.5b after tax profit, asset base reaches Rs. 129 b
  • Says strong rebound due to improved macroeconomic conditions
  • Benefits of permeating environmental, social business principles reflected across bottom line
  • All KPIs show improvement, above industry average

Chairman Alastair Corera
Managing Director and CEO Mahesh Nanayakkara 

Citizens Development Business Finance PLC (CDB), the fourth largest non-bank financial institution in Sri Lanka, is poised to accelerate growth, having rebounded strongly in the 2023-24 financial year on the back of improved macroeconomic conditions. 

A trailblazer in fin-tech adoption in Sri Lanka with a business model founded on environmentally and socially sustainable principles, CDB reported growth across its business portfolios with improvements to almost all key financial health indicators. 

Demonstrating growth in profitability, Earnings Per Share increased from Rs. 23.29 to Rs. 35.95. Regular cash flow generating assets increased from 91% to 93%. The Tier I and Tier II ratios were maintained above the statutory limits at 16.0% and 16.4%, while equity surpassed Rs. 20 billion.

During the year, CDB showcased increasing popularity for its environmentally friendly eShift electric three-wheelers and green lending products. CDB also continued to channel funds into the country’s rural and bottom-of-the-pyramid economies by effectively leveraging digital platforms. 

The company closed the year with a revenue growth of 11%, reaching Rs. 23.9 billion. This growth was driven by a 10% growth in its main revenue stream of interest incomes that reached Rs 22.2 billion. Interest expenses were contained at a much lower 4% growth (despite sustained growth in deposits by 17%), enabling a 20% growth in the net interest income. The net interest margin too, improved from 7.18% to 7.77%. Reflecting the growth of the company’s balance sheet, CDB’s Return on Average Equity (after tax) improved from 9.08% in the previous financial year, to 13.10%, and the Return on Average Assets (after tax) increased from 1.55% to 2.15%, while the Net Asset Value per Share went from Rs. 260.40 as at end March 2023, to Rs. 285.22 by end March 2024. 

The gross NPL improved from 15.71% in the previous financial year to 12.06% for the 90 days past due portfolio, indicating the sound quality of lending. 

Total assets of the company grew by 22% to Rs. 129 billion, boosted by a 12% growth in loans and advances to customers and a 75% growth in liquid assets. The deposit base also grew by 17% to Rs. 73.3 billion.

Digitisation of all functions contributed towards containing overheads within a 7% increase, against a rising cost environment. CDB has for the most part, replaced traditional brick and mortar branches in favour of digital platforms, effectively substituting digital platforms for both lending and deposit processing and for all other transactions. This significantly slashed processing time and costs. 

These efficiency gains are exhibited in the company’s key cost management ratios with the Cost to Income ratio declining from 56.5% to 50.4% and the Overheads to Revenue reducing from 23.5% to 22.7%. This trend is expected to continue in the new financial year, giving CDB a competitive advantage. 

CDB closed the financial year 2023/24 posting Rs. 4.6 billion in profit before taxes and a net profit of Rs. 2.5 billion, which is a 55% growth against 2022-23. 

With strategic business growth plans already formulated and demand mounting for green lending products, CDB said it is equipped and ready to fast track its digitally enabled, sustainable growth vision in 2024-25.