NSB achieves outstanding profits in 2024

• PBT soars 516% YoY to Rs. 26.43 b 
• Showcases resilience and strategic growth amid economic changes 
• PAT increases 126% to Rs. 16.29 b

The National Savings Bank (NSB) has once again solidified its position as a pillar of financial stability showcasing a year of remarkable resilience and strategic agility, unveiling its audited financial results for the year ended 31 December 2024. Against the backdrop of economic uncertainties, NSB reported a remarkable 126% increase in Profit After Tax (PAT), soaring to Rs. 16.29 billion from Rs. 7.22 billion in 2023. This phenomenal growth underscores the bank’s unwavering commitment to financial prudence, operational efficiency, and shareholder value enhancement.

Reflecting on the bank’s outstanding performance in 2024, NSB Chairman Dr. Harsha Cabral PC, stated, “NSB’s financial success in 2024 underscores the strength of our strategic vision, disciplined execution, and unwavering dedication to our customers and stakeholders. 

Despite a challenging macroeconomic environment, we have demonstrated resilience, achieving record profitability while maintaining a strong balance sheet and a stable risk profile. Our commitment to sustainable growth, prudent governance, and financial inclusivity continues to drive our long-term success. As we look ahead, we will further strengthen our role as a key pillar of Sri Lanka’s financial sector, ensuring that we create lasting value for the nation and its people.”

Core drivers of profitability: Strength in core banking operations

A pivotal driver of this exceptional performance was the remarkable 146% surge in net interest income, soaring to Rs. 72.78 billion from Rs. 29.57 billion in 2023. This growth was achieved despite a 10% year-on-year decline in interest income, primarily stemming from an accommodative monetary policy stance that resulted in subdued yields on loans and government securities. However, the substantial 34% reduction in interest expenses to Rs. 130.97 billion outpaced the decline in income, propelling a significant expansion in net interest income. 

“By recalibrating our deposit strategies and capitalising on favourable rate environments, we have significantly strengthened our interest margins,” remarked the General Manager/CEO, Shashi Kandambi. “The bank’s ability to optimise its asset-liability mix and enhance operational efficiencies has been instrumental in achieving this milestone, reaffirming its commitment to sustainable growth and value creation,” Kandambi further asserted.

Complementing this growth was a 37% rise in net fee and commission income (Rs. 1.75 billion) and robust trading gains (Rs. 912 million), reflecting diversified revenue streams. Additionally, fair value adjustments on financial assets contributed Rs. 442 million, reflecting a nimble approach to market volatility. Collectively, these factors fuelled a 122% growth in total operating income, which more than doubled from Rs. 34.35 billion in 2023 to Rs. 76.34 billion in 2024. The robust expansion of non-interest income highlights NSB’s strategic focus on fee-based services and innovative financial solutions.

Navigating headwinds with strategic credit risk management

Despite a challenging economic landscape, NSB maintained its commitment to responsible banking, as reflected in a 163% increase in impairment charges, totalling Rs. 11.21 billion which includes a part of the treasury receivables. Consequently, the ratio of Impaired Loans (Stage 3) to Total Loans surged to 5.18%, a notable rise from 2.41% recorded in the previous year. Meanwhile, the Impairment Coverage Ratio (Stage 3 impairment provision to Stage 3 Loans) remained robust at 44.50%, reflecting the bank’s prudent risk management approach. This strategic provisioning not only reinforced the bank’s resilience against potential credit risks but also sustained its growth momentum. By proactively managing loan book quality and adopting predictive analytics for risk assessment, NSB fortified its financial position against economic uncertainties.

Operational efficiency fuels the bank’s profitability

Demonstrating exceptional financial performance, the bank recorded total net income of Rs. 65.1 billion, a substantial 116% increase from the prior year. This growth was broadly supported by significant gains in net interest income, enhanced fee and commission revenues, and profitable trading operations. Operating profit after Value Added Taxes (VAT) and the Social Security Contribution Levy (SSCL) on financial services witnessed an extraordinary six-fold increase to Rs. 35.78 billion, underscoring the bank’s operational efficiency and financial discipline. This was achieved despite modest increases in personal and administrative expenses, which were carefully managed through digital transformation and automation initiatives.

Accordingly, the bank’s Profit before Tax (PBT) soared to Rs. 26.43 billion, a staggering 516% increase from the Rs. 4.29 billion recorded in the previous year. This exceptional performance, realised in the face of substantial economic pressures, highlights both the bank’s intrinsic resilience and its unyielding pursuit of sustainable profitability. Underpinned by a year of robust financial success, the bank’s Cost to Income ratio (excluding taxes) witnessed a substantial correction, improving from 71.59% to a commendable 38.72%, indicative of significant gains in operational effectiveness.

With income tax expenses for the year reaching Rs. 10.15 billion, the resulting Profit After Tax (PAT) stood at Rs. 16.29 billion. Thus, the bank’s total contribution for the year as taxes and levies totalled Rs. 19.49 billion, underscoring its vital role as a state-owned bank in bolstering the national economy.

Solid financial position and robust capital and liquidity resilience

Guided by a clear strategic vision, NSB increased its total assets to Rs. 1.75 trillion, a 3.9% expansion. This growth was propelled by a focused approach that included a measured increase of 1% in loans and advances, bringing that portfolio to Rs. 532.38 billion, coupled with a significant 10% surge in strategic investments in debt and other instruments, resulting in a total of Rs. 1.04 trillion. At the conclusion of the financial year 2024, the bank’s deposit base experienced a 5% augmentation, reaching Rs. 1.56 trillion thereby affirming its status as the primary source of funding.

The bank’s strong financial performance yielded significant advancements across a broad spectrum of key performance indicators. The Net Interest Margin (NIM) witnessed an extraordinary upswing, reaching 4.23%a striking improvement from the 1.79% recorded in the previous year underscoring the bank’s astute financial management and strategic realignment of interest-earning assets.

The Return on Assets (ROA) before Taxes increased substantially to 1.54%, compared to 0.26% in the preceding year, while the after-tax Return on Equity (ROE) rose from 9.36% to 18.07%. This positive trajectory was further supported by a significant accumulation of retained earnings, which nearly doubled to reach Rs. 28.46 billion.

Demonstrating prudent financial management and a steadfast commitment to security, the bank maintained robust capital adequacy ratios, significantly exceeding Basel III regulatory requirements (8.5% and 12.5%, respectively). The Tier 1 ratio stood at an impressive 23.42%, while the Total Capital Ratio reached a noteworthy 25.88%. This strong capital position underscores the bank’s capacity to absorb unforeseen risks and ensures its continued stability.

In terms of liquidity, the bank’s Liquidity Coverage Ratios for both Rupee and all currencies remained well above regulatory minimum of 100%, at 351.33% and 344.55% respectively, ensuring its ability to meet all financial obligations promptly and reliably.

Commenting on the bank’s exceptional performance, NSB General Manager/CEO Kandambi, stated, “The remarkable financial achievements of NSB in 2024 stand as a testament to our resilience, strategic foresight, and unwavering commitment to excellence. Despite navigating a complex economic landscape, we have strengthened our financial foundation, expanded our service capabilities, and enhanced value for our stakeholders. Our success is driven by prudent risk management, innovation, and a deep-rooted commitment to national progress.

As we look to the future, sustainability and inclusivity will remain at the heart of our strategy. Through the expansion of green finance initiatives, we aim to support renewable energy projects and environmentally responsible investments, contributing to a more sustainable economy. Simultaneously, our efforts to advance digital banking solutions will bridge financial accessibility gaps, empowering underserved communities and fostering economic inclusivity.

With a strong capital position and a clear strategic direction, NSB is well poised to play a pivotal role in shaping Sri Lanka’s economic resurgence. We will continue to evolve, innovate, and lead with purpose, ensuring that we remain a trusted partner in the financial well-being of our nation while championing a future that is both sustainable and inclusive.”

The Board of Directors of NSB is composed of five distinguished members, led by Chairman Dr. Harsha Cabral, PC. The Board also includes Jude Nilukshan, S.R.W.M. Ruwan Palitha Sathkumara, Dushyanta Basnayake, and Ashane Jayasekara.