NDB reports all-time high PAT of Rs. 4.2 b in 1H

Chairman Sriyan Cooray (left) and Director and CEO Kelum Edirisinghe 

• Driven primarily by core banking operations, profit before all taxes and after tax grow by 32% 
• Net loans, deposits and total assets expand by 21%, 10% and 15%, respectively, with highest-ever absolute net loans growth during a 1H period 
• Net loans to SMEs cross Rs. 100 b mark, accounting for close to 20% of loan book 
• Solvency level continues to be sound, with over 5% buffer in terms of CET1 and over 4% across Total CAR

The National Development Bank PLC (NDB) yesterday announced the results for the six-month period ended 30 June 2025, reporting a total operating income and pre-tax profit of Rs. 22.3 billion and Rs. 8.6 billion, respectively (1H 2024: Rs. 22.9 billion and Rs. 6.5 billion). 

Net interest income, which accounted for over 75% of the bank’s total operating income, amounted to Rs. 16.9 billion for the semi-annual period; rising 2.7% over Rs. 16.5 billion in 1H 2024. This was notwithstanding the sharp decline in interest rates, where the one-year Government Treasury Bill yield fell to 7.9% at end-June 2025 from being close to 10.3% at end-June 2024. NDB was able to maintain its net interest margins broadly at 4.0% levels (2024: 4.3%) which, excluding items of a one-off nature, was 4.2% on a like for like basis (2024: 4.4%).

At end-June 2025, the bank had close to Rs. 50.3 billion in loans and deposits under a special arrangement with its customer(s), with a netting-off feature (end-2024: Rs. 19.6 billion). 

Net fee and commission income grew by 8.4% to reach Rs. 3.6 billion which, the second quarter alone considered, was an impressive 20.8% quarter-on-quarter growth, underlining the conscious and diligent efforts made to improve its overall contribution to income from non-funded sources. Growth in net fees stemmed from almost all aspects of its core business operations. 

Impairment charges of Rs. 4.5 billion for the period saw a 46.7% year-on-year (YoY) reduction from Rs. 8.4 billion in the same period of 2024, attributable to greater focus of the bank on improving credit quality. This took the bank’s total impairment coverage ratio, excluding such one-off items of a special nature, to 8.7% (end-2024: 9.6%), which compared well relative to the industry average at the said period end. Operating expenses totalled Rs. 9.2 billion, which, whilst increasing by 14.8% over 1H 2024, stemmed primarily from staff-related routine increments and realignments to the industry and higher investments in IT infrastructure and those of a direct business development nature. 

Return on average equity was 10.6%, down from 12.2% in 2024, whilst annualised earnings per share was Rs. 19.65, down from Rs. 21.25 for 2024. Respective ratios at the Group level were 10.8% (2024: 12.5%) and Rs. 21.23 (2024: Rs. 23.05), respectively. The bank’s pre-tax return on average assets was 2.0% (2024: 3.1%). Net asset value per share was Rs. 186.81 (2024: Rs. 186.91) and compared with a closing share price of Rs. 120.25, which posted a 6.2% appreciation since end-2024. Group net asset value per share was Rs. 199.37 (2024: Rs. 199.13).

The bank’s total deposits amounted to Rs. 696.1 billion at 30 June 2025 (end-2024: Rs. 631.7 billion, 10.2% growth), whilst net loans expanded to Rs. 557 billion (end -2024: Rs. 460.7 billion, 20.9% growth). Excluding transactions of a one-off and special nature, this represented a normalised absolute net growth of 5.5% and 14.9% over end-2024, respectively. 

The bank’s Current and Savings Account (CASA) ratio on a normalised basis was 25.0%, having improved from 22.5% at end-2024, ultimately reflecting the bank’s conscious efforts to improve its low-cost funding. 

The bank’s impaired loans (Stage 3) to total loans ratio was 5.1% (end-2024: 5.2%), which compared well with the industry average. Its Stage 3 provision coverage was 53.4% (end-2024: 54.5%), which also was close to the industry norm. 

Liquidity levels also remained strong, with the bank’s liquidity coverage ratios, across both Rupee and all currency, being 330.9% and 253.8%, respectively as at 30 June 2025 (end-2024: 358.1% and 308.3%) and its net stable funding ratio being 124.5% (end-2024: 152.4%) – all of which were well above the minimum regulatory requirements of 100%. 

The bank’s solvency levels as measured by CET1/ Tier I and Total CAR were 12.3% and 16.6%, respectively, representing a strong over 5% buffer over its regulatory minimums from a CET1 perspective and over 4% buffer from a Total CAR perspective (end-2024: 13.7% and 19.1%).

The branch network stood at 113 branches, supplemented by an ATM network of 60 and cash recycle machines (CRM) network of 106 spread across the island. Total staff as at the end of the period under review was 2,882 (2024: 2,920). 

NDB Director/CEO Kelum Edirisinghe said: “Our results are a testimony to our diligent, conscious, and concerted effort to improve every aspect of our business, whilst taking every measure reasonably necessary to strengthen our overall risk guard rails on a continuous basis. Supported by the continued positive progress of the Sri Lankan economy – albeit several macro level headwinds stemming mostly from the global economic landscape – we are very pleased to witness the resurgence of much of our customers across retail and all business segments. With customer-centricity at the heart of our every endeavour, we focused on delivering impactful support across all our client segments to enable them to move forward in this emerging environment.”

“For us, the first six months of this year mark many milestones. Amongst them all, one standout is our continued contribution to the Small and Medium Enterprises (SMEs) in the country – one which is best reflected in our loan book crossing the Rs. 100 billion mark and accounting for close to 20% of our total loans – a feat we are very proud of. NDB’s recent recognition as Euromoney’s Best Digital Bank for SMEs for the year 2025 provides further testimony to the success of this focused effort to serve this crucial and determinative segment of our economy,” he added.

Edirisinghe further said: “Looking ahead, our focus is clear. We will continue to leverage on our deep-rooted knowledge and experience in understanding customer behaviour better, use our digital capabilities to create greater ease of access, and use the diverse skills and capabilities of our staff at both the front end and back to adopt and adjust to an ever-evolving business landscape in order to ultimately better enable us to create sustained shareholder value over the long haul. Conscious of also the challenges which may lie ahead, we remain confident of the bank’s continuing trajectory of growth in its core banking operations and realising its vision for the future sooner rather than later.”