NDB pre-tax profits surge 118% to Rs. 4 b; marks strong start for 2025

• Post-tax profitability up 168% to Rs. 1.9 b
• ROE at 10.03%
• Total assets up 7% to Rs. 852.4 b
• Healthy growth in loan book of 5% to Rs. 535.2 b stemming from all business sectors 
• CASA ratio improvement by 91 bps to 25.82%

Chairman Sriyan Cooray

Director/CEO Kelum Edirisinghe

National Development Bank PLC (NDB) yesterday announced its financial results for the three months ended 31 March 2025, reflecting solid growth in line with the revival of economic activity and rising private sector credit demand.

Director/CEO Kelum Edirisinghe said: “We made a strong start to the year, following the highest-ever profit recorded in the bank’s history in 2024. Guided by our priorities, we have devised bold, actionable plans to unlock greater potential and accelerate our strategic growth agenda for 2025 and beyond. Our aim is to make an impactful contribution to the country’s economic growth, provide superior service to our clients, deliver sustainable returns, and enhance shareholder value.”

“We are seeing renewed demand for credit as our customers regain financial momentum in an improving economic environment. NDB is well-positioned to serve our clientele with simpler, smarter, and more agile banking solutions, blending expert product advisory, digital convenience, and exceptional customer care to deliver a truly rewarding banking experience,” he added.

Total operating income of the bank for the three months ended 31 March 2025 (period under review) grew by 5% over the same period in 2024 year-on-year (YoY) to Rs. 10.6 billion. Net interest income (NII), the majority contributor to total operating income, was Rs. 8.0 billion, which declined marginally by 1% YoY. 

The decline was predominantly attributable to the lower interest rates that prevailed during the period under review versus one year ago, which approximated 270 bps less on a monthly Average Weighted Prime Lending Rate (AWPR) basis. 

Timely repricing of the deposit book, strategic focus on optimising the asset mix to improve yields, and enhancing funding efficiency enabled NII preservation, thereby reducing pressure on the Net Interest Margin (NIM). The resultant NIM for the first quarter of 2025 was 3.92%. Net fee and commission income for the period was Rs. 1.8 billion, again a marginal decline of 2% YoY. Whilst fee income from credit and debit cards slowed, income from alternative channels, including electronic transactions and operational services, showed positive YoY growth. All other income categories netted Rs. 842.4 million, a considerable growth over the comparative quarter which bolstered total operating income.

In terms of impairment, the bank recorded a total impairment charge of Rs. 2.6 billion, a significant reduction of 40% over the corresponding period of the last year. Additionally, the bank recorded a reversal of Rs. 457.5 million related to the unwinding of the Day One Loss of debt restructuring in 1Q 2025. The impairment charge on loans and advances for 1Q 2025 saw a 22% reduction YoY. It is also encouraging to note that the staging of credit facilities has improved compared to the comparative quarter of the prior year, demonstrating the results of focused asset quality enhancement initiatives deployed by the bank. Impaired loans (Stage 3) to Total loans ratio closed in at 5.53% (2024: 5.18%), whilst the Impairment (Stage 3) to Stage 3 loans ratio was 53.26% (2024: 54.48%).

The bank incurred total operating expenses netting Rs. 4.4 billion for 1Q 2025, reflecting a 13% YoY increase. This increase was primarily attributed to an increase in premises and establishment expenses and other operating expenses. Strong cost discipline and effective cost management have kept costs within expected levels. 

The resultant Profit Before Tax (PBT) was Rs. 4.0 billion, an increase of 118% YoY. Taxes on financial services and income tax netted Rs. 2.1 billion, resulting in a Profit After Tax (PAT) of Rs. 1.9 billion, a YoY growth of 168%. 

The balance sheet posted robust growth during 1Q 2025, growing by 7% from the end 2024 position year-to-date (YTD) to Rs. 852.4 billion. This is the highest balance sheet growth the bank posted since consecutive quarters of growth curtailed at 2% or below, signalling robust growth for the period ahead. Gross loans grew by 5% or Rs. 25.4 billion YTD, to Rs. 535.2 billion, reflecting broad-based momentum across all business segments. The local currency loan book grew by Rs. 16.9 billion within this growth. 

Total deposits grew by 2% or Rs. 10.6 billion YTD to Rs. 642.3 billion, mainly driven by volume growth of the local currency deposit book by Rs. 9.1 billion during the three months under review. The bank’s Current Account Savings Account (CASA) ratio also improved by 91 bps to 25.82% at the end of the first quarter of 2025, from 24.91% at end 2024. The CASA base increased by Rs. 8.5 billion, a 5% growth during 1Q 2025. The improving trend in the CASA ratio is a result of dedicated strategic initiatives deployed in this regard. The total equity base of the bank was Rs. 76.8 billion. 

Denoting sound capital adequacy, Tier I and Total capital adequacy of the bank stood at 12.16% and 16.95%, 366 bps and 445 bps above the minimum requirement, respectively. Regulatory Liquidity Coverage Ratio (Rupee), Liquidity Coverage Ratio (All Currency) and Net Stable Funding Ratio stood well above the regulatory minimum requirement of 100% at 392.64%, 341.38% and 133.22%, respectively. 

Return on average equity (ROE) was 10.03% (2024: 12.22%), whilst earnings per share was Rs. 18.18 (2024: Rs. 21.73). Respective ratios at the Group level were 10.19% (2024: 12.46%) and Rs. 19.70 (2024: Rs. 23.57). Bank pre-tax return on average assets was 1.92% (2024: 3.09%). Net asset value per share was Rs. 180.29 (2024: Rs. 186.91) and compared with a closing share price of Rs. 107.00. Group net asset value per share was Rs. 192.53 (2024: Rs. 199.13).

As the Sri Lankan economy charts a path towards recovery, NDB remains deeply aligned with the nation’s growth ambitions, committed to unlocking prosperity for all Sri Lankans. With a legacy in development financing and a track record of standing by citizens through every economic cycle, NDB is well-positioned to drive a future of smart growth. Through its robust product portfolio and strong integration of Environment, Social, and Governance (ESG) principles, it aims to create sustainable value, fostering a thriving, resilient economy while delivering lasting benefits to its customers, shareholders, and communities.