DEG provides $ 21 m loan to NDB Bank to strengthen SME sector

NDB Bank yesterday announced the receipt of a long-term loan facility amounting to US$ 21,000,000 from DEG – Deutsche Investitions – und Entwicklungsgesellschaft mbH, Germany, to support NDB Bank’s long-term commitment to finance the SME sector in Sri Lanka.

The loan agreement to this effect was signed in Colombo on Friday by NDB Bank Chief Executive Officer Russell de Mel and DEG Senior Vice President Bernd Tuemmers, on behalf of the respective institutions.

DEG, member of KfW Bankengruppe, is one of the largest European development finance institutions for long-term project and company financing. For almost 50 years, DEG has been financing and structuring the investments of private companies in developing and transition countries.

DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy, from agriculture to infrastructure and manufacturing to services.

 It also focuses on investments in the financial sector in order to facilitate reliable access to capital locally.

To date, DEG has worked together with more than 1,600 companies and has contributed with its own financing commitments of more than 11 billion euros to providing an investment volume of 70 billion euros.

NDB, which was a traditional Development Finance Institution (DFI), has transformed itself into a universal bank having acquired ABM Amro’s business in Colombo in 2001 and merging with it in 2005.

In addition to project loans, it offers all banking products and services to corporates, SMEs and retail customers through its network of 55 branches islandwide.

Today, NDB positions itself as a unique banking group with its presence in capital markets, which includes investment banking, stock broking and funds management, and also in insurance with its venture with Aviva NDB Insurance. It also operates a leasing company in the Maldives and an investment bank in Bank in Bangladesh.

             

“While aggressively marketing our deposit and savings products, we will actively diversify our sources of funding by entering the debt market and sourcing finance on the strength of our own balance sheet, from sources internationally such as DEG, which will support our asset strategy,” stated NDB Bank’s Vice President, Finance Planning and Treasury Nilam Jayasinghe.

He also stated that during the first half of this year, the bank’s loans and advances had grown by 23%, well over the industry, while maintaining strong asset quality, which is probably one of the lowest in the industry. Currently NDB is rated AA(lka) by Fitch Rating and enjoys a “stable” outlook.

NDB Bank has been working with businesses in the SME sector for over 25 years, acting also as an apex agency to channel lines of credit from international sources, financing over 35,000 projects directly and indirectly.

This new five-year long term loan facility will enable NDB Bank to enhance its lending to the priority sectors of Sri Lanka and support the Government’s effort in reaching its economic goals which include doubling per capita GDP over the next three to five years.

“The foundation of a country’s growth lies on Small and Medium Enterprises (SMEs) and it is common to both developed and developing nations. SMEs are the bedrock of employment generation and economic stimulation. In the post war era, economic development has to spread not only to the urban and metro areas of the country but also to rural areas. Thus, NDB Bank has planned for significant branch expansion focusing on potential rural economies,” stated NDB Bank CEO Russell De Mel.

The biggest challenge faced by SME businessmen is sourcing capital to start up and grow their businesses. While large companies dominate the captive businesses, often the SMEs play the key role in both the supply and the distribution end of the supply chain. With this in mind NDB Bank has tailor-made products to suit the SMEs through the entire supply chain.

The agriculture, trading, exports and manufacturing sectors are being targeted by NDB with the goal of developing the SMEs by enabling easy access to much needed finance for both infrastructure machinery and working capital financing.

“Over the years NDB has acquired a wealth of knowledge on SMEs due to its long engagement with this sector. With substantial learnings behind it, NDB is in a strong position to finance the SMEs for all their needs. NDB in fact promotes SME banking and not just SME lending, with special focus on developing entrepreneurship. As such, NDB’s clientele has access to a host of benefits in the form of advisory, technical input and even on branding and packaging, besides financial assistance,” commented De Mel.