NDB reports all-time high earnings; doubles PAT on a normalised basis

Chairman Sriyan Cooray

Director/CEO Kelum Edirisinghe

 PAT at Rs. 11 b excluding one-off impact of ISB debt restructure in 2024, which represents close to two-fold growth on comparable basis 

 Net loans and deposits expand by 26.7% and 10.4%, respectively, on normalised basis, outperforming industry averages on an All Currency basis across both local currency and foreign currency 

 Credit to SMEs expands by over 25%, showcasing continued commitment to supporting country’s economic revival

 Full-year ROE and ROA (pre-tax) improve to 13.5% and 2.5%, respectively, supported by strong momentum in 2H 2025, where ROE and ROA was at 16.4% and 2.8%, respectively 

 Growth driven primarily by core banking operations 

The National Development Bank PLC yesterday announced a strong growth across all business lines with Net Banking Revenue increasing by a 45.2% on a comparable basis. 

In a statement NDB said like most other peers, the Bank’s 2024 financial performance was positively impacted following the successful conclusion of the ISB debt restructure with a one-off impact on interest income, fee income and net impairments amounting to Rs. 1.4 billion, Rs 0.7 billion and Rs. 9.4 billion, respectively for the said year. 

Net interest income (NII), which accounts for close to 75.0% of Bank’s total operating income, grew by 6.5% on a normalised basis. Despite pressure on interest-earning assets arising from the lower interest rate environment, the Bank’s disciplined margin management helped stabilise Net Interest Margin (NIM) at 4.0% for the year. On a comparable basis, excluding one-off exceptional items, NIM stood at 4.2%, compared to 4.3% for both scenarios in 2024. By the end of the year, the Bank had close to Rs. 29.3 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 rose by 14.3% to Rs.  8.1 billion for the year  excluding ISB restructuring related fees. Key growth drivers for the current year were trade finance, credit and lending, digital banking and credit and debit cards.

Credit costs for the year declined substantially by 57% to Rs. 5.7 billion, a testament to the Bank’s strong credit underwriting practices and focused efforts on collections and recoveries. The Bank’s success on account of the latter is best reflected in notably improved stage 2 and 3 loan stock which stood at 7.9% and 10.8% respectively at end 2025 as compared with 16.6% and 14.0% at end 2024. Stage 3 provision coverage also saw further improvement to 59.1% from 54.5% during 2024 showcasing the Bank’s prudent management of credit risk. 

Operating expenses closed at Rs. 19 billion, up 13.1% from 2024. This increase was primarily driven by routine staff-related increments and necessary market realignments, along with higher investments in IT infrastructure and business development undertaken during the year.

Return on average equity (ROE) was 13.5% - improved notably when compared with 12.2% in 2024 on an all-inclusive basis and 7.7% excluding the one-off income reported from the ISB debt restructure. Looking at the second half of 2025 alone, ROE was close to 16.4% indicating strong improvement from the first half of the year. Similarly, the Bank’s pre-tax return on average assets was 2.5% for the full year and 2.8% for the second half of 2025 (2024: with and without ISB one-off gains 3.1% and 1.5%, respectively). 

Earnings per share was Rs. 25.90 for the full year 2025 as compared with Rs. 21.25 in 2024 on as is basis and Rs. 13.30 excluding the impact of the ISB debt restructure. Group level ROEs and EPS, respectively, were 13.6% (2024: 12.5%) and Rs. 27.83 (2024: Rs. 23.05). Net asset value per share was Rs. 201.51 (2024: Rs. 186.91) and compared with a closing share price of Rs. 141.25, which posted a 24.7% appreciation since end 2024. Group Net asset value per share was Rs . 215.45 (2024: Rs. 199.13).

By year-end, the Bank’s total deposits increased by 11.9% to Rs. 707.2 billion. Net loans expanded more strongly by 28.8% to Rs. 593.6 billion. However, excluding transactions of a one-off and special nature, this represented a normalised absolute net growth of 26.7% and 10.4% over end 2024, respectively. The Bank’s CASA ratio on a normalised basis stood at 23.9% by year end 2025 having improved from 22.5% at end 2024 in line with the Bank’s ongoing efforts to improve its low cost funding from current levels. 

Liquidity levels also remained strong with the Bank’s Liquidity coverage ratios, across both Rupee and All currency, closing at 257.3% and 208.5%, respectively at end 2025 (end 2024: 358.1% and 308.3%) while the Net stable funding ratio was 129.7% (end 2024: 152.4%) - all of which were well above the minimum regulatory requirements of 100.0% and comparing well with industry averages. The Bank’s solvency levels as measured by CET1/ Tier I and Total CAR were 12.4% and 15.9%, respectively representing more than adequate buffers over its regulatory minimums (2024: 13.7% and 19.1%).

Director/CEO Kelum Edirisinghe said: “We are very pleased with the Bank’s performance during the year. This achievement is not the end result of one-off gains but purely the outcome of focused execution in our fundamental banking businesses, disciplined credit growth, prudent risk management, a strong deposit franchise, sustained net interest margins, and the continuing efforts to improve our overall operating efficiencies on a consistent basis. Our core banking operations have performed exceptionally well, despite the pressure stemming from lower interest rates, reinforcing the sustainability and quality of our earnings.”

“Importantly, this performance also equally reflects the trust our customers place in us and the dedication of our employees who strive to deliver excellence every day. Their commitment has strengthened our franchise and deepened relationships across retail, SME, and corporate banking segments. Amongst others, one of our standout achievements during the year was the strong growth reported in the Small and Medium Enterprise (SME) loan book, which grew by over 25.0% year-on-year, clear evidence of our deep and ongoing commitment to advancing the SME sector, a critical engine of national economic growth. This performance is both a milestone and a reflection of the strength of our foundation and our trajectory, plans and ambitions going forward,” he said.

“While we celebrate these results, we remain focused on our future. Our 2030 strategy aims to further strengthen our core banking operations, enhance digital capabilities, optimise cost efficiency, and grow responsibly. We are confident that the momentum generated this year positions us for sustained long-term value creation,” said Edirisinghe adding “We look forward to the future with a great degree of hope and optimism.”