NDB reports strong financial results in 1Q

NDB reported strong financial results for the first quarter ended March 31, 2012 and has made significant progress during the period. The Banking Revenue for the quarter was Rs. 2,064 million, an increase of Rs. 611 million, or 42 per cent, over the same period in 2011. The Profit After Tax during the quarter increased by Rs. 506 million, or 115 per cent compared to the same period in the prior year.

The reported earnings included one off equity income of Rs. 271 million on the sale of its investment in a 100 per cent owned subsidiary, NDB Investment Bank Ltd (NDBIB) and of the 5 per cent direct holding in AVIVA NDB Insurance PLC, to its subsidiary Capital Development and Investment Company PLC (CDIC) in March 2012. NDB continues to position itself as the only financial services group in the country, with subsidiaries and associates in investment banking (locally and regionally), stock broking, and wealth management, which make up the capital markets cluster, and insurance.

This divestment to the Bank’s 99.6 per cent owned subsidiary CDIC was carried out as part of the overall Group’s corporate restructuring exercise, with which, CDIC now positions itself as the diversified financial services investment arm of NDB Group. Accordingly, these investments will complement CDIC’s existing strategic investments in AVIVA NDB Insurance PLC and NDB AVIVA Wealth Management Ltd.

NDB Chairman Hemaka Amarasuriya commented, “We are excited about our first quarter results. We were able to continue the strong momentum built in 2011, and will seek further growth opportunities for the Bank throughout 2012. Our discipline in the execution of our strategies has produced excellent first quarter results. Our focused management on all of our banking operations is expected to deliver solid growth into the future and enhance shareholder value.”

The Bank’s Profit After Tax growth after excluding this one-off income shows an increase of 52 per cent compared to the first quarter of 2011. The Basic earnings per share were Rs. 17.96, an increase of 68 per cent over the first quarter of 2011.

The NDB Group’s Profit Attributable to Shareholders for the quarter increased by 19 per cent over the prior period. The growth in NDB group’s PAS was lower than the Bank’s Profit After Tax as the one-off equity income of Rs 271 million is eliminated in consolidating the NDB results. The Bank’s Return on Average Assets and Equity for the first quarter of 2012 were 2.1 per cent and 22.8 per cent respectively, compared to 1.6 per cent and 15.0 per cent, respectively, over the first quarter of 2011.

The Bank’s loans and advances increased to Rs. 105.2 billion as at 31 March, 2012, an increase of Rs 27.4 billion, or 35 per cent, compared to 31 March, 2011. The NPLs to gross lending portfolio was 1.36 per cent as at 31 March, 2012 end compared to 1.82 per cent as at 31 March, 2011. The NPL ratio of the Bank continues to remain healthy and is well below the industry average. The Bank has been able to achieve this low level of delinquency due its proactive risk management practices. The Bank’s robust balance sheet and liquidity means that the Bank is able to continue its lending and maintain a strong capital adequacy.  Additionally, total deposits increased to Rs 88.4 billion as at March 31, 2012, a 46 per cent increase from the deposit level as at March 31, 2011.  The growth in assets and deposits was the result of continuing organic growth through the Bank’s existing branch network. The Bank also expanded its network to 62 branches with additional branches in Hambantota and Kaduwela.

NDB continued its active engagement in SME banking with agriculture, handicrafts, manufacturing, trading and distribution, fisheries, and dairy sectors to develop the entrepreneurs in the country. During the first quarter, NDB also conducted SME capacity-building workshops in Moratuwa, Pilimathalawa, Ambalanthota and Kurunegala in an effort to enrich their knowledge base.

As part of the NDB Group, the NDB Investment Bank had a positive start to the financial year, showing dominance in the country’s investment banking arena by successfully managing the only two IPOs to debut on the CSE in the first quarter of 2012. The Access Engineering IPO raised Rs. 500 million, while the Mackwoods Energy IPO raised Rs. 350 million; both were oversubscribed on the opening day. The Investment Bank also structured several securitisation deals for finance companies in the first quarter of 2012 and collectively raised over Rs. 1.1 billion, asserting ourselves as the leading investment bank in the country.   

Commenting on the Group’s future plans NDB Bank CEO Russell de Mel stated, “The challenge for NDB Group on its way forward will be to maintain the growth momentum in terms of assets, liabilities and distribution whilst containing costs. NDB Group will leverage on technology and Innovation heavily as it enters the first half of 2012. Hence, I request you to watch this space as we continue to enhance our customer experience.”