NDB doubles net profit to Rs. 605.3 m in 1Q

NDB Group’s profit attributable to shareholders for the first quarter of 2011 doubled over that of the same quarter of 2010 recording a growth of 102% to Rs. 605.3 million.

The improved performance was supported by NDB Bank’s strong and sustainable core banking profits and of the group companies.

In a statement NDB said the group has been able to sustain core banking profit growth and demonstrate a systematic increase in its performance as a financial services group.

NDB Group’s profit before tax for the quarter ended 31 March 2011 was Rs. 966 mn, a growth of 23% over the corresponding period last year. NDB Bank’s profit before tax for the quarter was Rs. 708 mn, a growth of 8% over that of the first quarter of 2010. The core banking income of the bank increased by 15% over the same period.

The bank’s profit after tax increased even more significantly by 65%, partly due to the reduced tax rates applicable from 2011.

The bank’s balance sheet as at 31 March 2011 grew by 17% over 31 March 2010 from Rs. 94.6 bn to Rs. 110.3 bn. This was mainly due to the significant growth in the bank’s gross lending portfolio by Rs. 20.1 bn (35%) over the past 12 months.

This was supported by a growth of 21% in the deposit portfolio over 31 March 2010. This impressive growth in the bank’s lending portfolio and the deposit liabilities were well in line with industry growth rates.

Despite the significant growth in the loan portfolio in all the sectors, NDB Bank has been able to contain its non-performing loans (NPL) ratio to an all time low of 1.8%, which is one of the lowest in the industry, due to prudent underwriting policies and well-defined risk acceptance criteria.

The bank has been able to achieve this low level of delinquencies by analysing the customers’ cash flows and matching their repayments to their business income cycles. The provision cover on NPLs was at 73% as at 31 March 2011 with an open loan position of 3.29%, which signify minimum amount of stress on the bank’s equity, on account of un-provided delinquencies.

The bank’s Tier 1 Capital Adequacy Ratio of 11.18% and a Tier 1 & 2 ratio of 12.89% are well in excess of the regulatory minimum of 5% and 10% respectively, providing ample capacity for the rapid expansion planned for the future.

SME lending

In addition to the traditional forms of lending to the SMEs, the bank also intermediated in facilitating links between the small time producers with the large scale distributors and vice versa.

NDB Bank has also taken the far sighted initiative of pursuing a customer centric cash flow based lending approach as opposed to the traditional collateral based lending.

Further strengthening the bank’s commitment to the SME sector, NDB Bank entered into an agreement with the Government of Sri Lanka, to promote Small and Medium Enterprise Development Facility Project (SMDEDeF) to empower the growing needs of this sector in the country.

SME’s have become a key area of focus for NDB Bank which is committed to develop this sector by educating and enhancing skills and building their competencies to take on the emerging SME opportunities in the country. In line with this concept, the first workshop was conducted in Matara in partnership with the International Finance Corporation (IFC) — a member of the World Bank group to develop skills and enhance the knowledge of Small and Medium Enterprise (SME) sector of Matara.  

A first of its kind, the workshop for SME’s will be spread across to the rest of the country within the year. These seminars help SME entrepreneurs to better manage a SME business in a competitive environment.

Corporate and retail banking

The Commercial Banking business actively explored growth opportunities in new market segments this year, expanding its product offering, synergising with other business streams.

The home grown solution on Electronic Banking was continuously developed and customised to suit the changing needs of transactional banking.

On the Retail Banking front, in line with the National Savings drive taking the core concept of ‘savings’ beyond monetary measures, to the extent of cutting down unnecessary wastage in utilities and saving national resources.

A massive savings campaign spearheaded by CEO Russell de Mel was held in the towns of Galle and Kandy, where the staff of NDB stepped onto streets to educate the communities on the importance of savings. As a result close to 100,000 Sri Lankans were benefited from this national savings campaign.

Diversity, strength and stability of the NDB Group

NDB Group differentiates itself from its peers by providing its customers with an integrated value proposition in banking and financial services, including capital market and insurance offerings. With a healthy balance sheet, strong capital and liquidity positions, supported by its talented and committed team, NDB Group is well positioned to grow from strength to strength as a dominant force within the financial services sector.

With its presence in full fledged banking, capital markets and insurance, the Group positions itself as a unique knowledge hub.

With a healthy and well structured balance sheet, and an affirmed rating of “AA (lka)” by Fitch Ratings, NDB provides its stakeholders, the much desired comfort for their investment and future growth potential.