NDB plows ahead beating economic odds

National Development Bank PLC (NDB) plowed ahead beating the odds in a slow-moving economy as the bank recorded some solid growth in new loans and reported strong top and bottom line performances for the September quarter (3Q18), the interim financial accounts showed. NDB reported Rs.6.49 a share or Rs.1.15 billion in total earnings for the July-September period, up 11.3 percent from the same period last year, supported by some solid core banking performance. 

However, on a quarter-on-quarter basis, the earnings were down as the bank reported earnings of Rs.7.15 a share or Rs.1.27 billion for 2Q18. During the quarter under review, the bank grew its loan book by Rs.27.4 billion, perhaps the highest in the history for the bank in a 
single quarter. 

The bank had only Rs.27.9 billion growth in new loans during the first half of 2018. This translates into a 19.8 percent growth in new loans for the nine months, a rate which can be termed as aggressive considering the peer bank performance and the lukewarm industry growth.

The bank had a loan book of Rs.334.1 billion and an asset base of Rs.457.9 billion by end-September 30, an increase of 20 percent. 
NDB is hopeful that it could soon become a systematically important private bank with assets over Rs.500 billion before its original target in 2020. 

However, the bank’s asset quality weakened as the gross non-performing loan ratio rose to 2.57 percent, from 1.83 percent at the beginning of the year. 

Meanwhile, the credit costs or the provisions made for possible bad loans rose sharply during the period. 

The specific provisions rose to Rs.729.5 million during the quarter from Rs.26.4 million recorded for the same period 
last year.

The collective impairments rose to Rs.389.7 million, from Rs.243.6 million.

Meanwhile, the bank reported a net interest income of Rs.3.9 billion, up 30.2 percent from a year ago, which was supported by the solid growth in loans and margins. 

The net interest margin rose to 3.36 percent, from 3.00 percent at the beginning of the year.

The bank raised Rs.55.3 billion in deposits with a growth of 20.2 percent. 

NDB’s rights issue to raise Rs.6.2 billion in fresh equity was subscribed up to 60 percent of issue and the management is seeking subscriptions from suitable investors for the balance. 

For the nine months ended September 30, 2018, the bank reported earnings of Rs.20.13 or Rs.3.6 billion, up 42 percent from a year ago. 
The net interest income for the period was Rs.10.8 billion, up 37 percent. 

As at September 30, 2018, the government had a 30 percent stake in NDB through Bank of Ceylon, the Employees’ Provident Fund and 
Sri Lanka Insurance.