NDB reports institutional all-time high PAT of Rs. 4.2 bn for 1H25

Sriyan Cooray - Chairman	Kelum Edirisinghe - CEO

National Development Bank PLC released results for six-month period ended June 30, 2025 reporting a total operating income and pre-tax profit of Rs. 22.3 billion and Rs. 8.6 billion, respectively (H1-2024: Rs. 22.9 billion and Rs. 6.5 billion). 

Net interest income, which accounted for over 75 percent of the Bank’s total operating income, amounted to Rs. 16.9 billion for the semi-annual period; rising 2.7 percent over Rs. 16.5 billion in H1-24. This was notwithstanding the sharp decline in interest rates where the one-year government Treasury Bill yield fell to 7.9 percent at end June, 2025 from being close to 10.3 percent at end June, 2024. 

NDB was able to maintain its Net Interest Margins broadly at 4.0 percent levels (2024: 4.3 percent) which, excluding items of a one-off nature, was 4.2 percent on a like for like basis (2024: 4.4 percent). 

At end June 2025, the Bank had close to Rs. 50.3 billion in Loans and Deposits under a special arrangement with its customer(s) with a netting-off feature (end 2024: Rs. 19.6 billion).  Net fee & commission income grew by 8.4 percent to reach Rs. 3.6 billion whilst, the second quarter alone considered, it was an impressive 20.8 percent quarter-on-quarter growth; underlining the conscious and diligent efforts made to improve its overall contribution to income from non-funded sources. Growth in net fees stemmed from almost all aspects of its core business operations.Impairment charges of Rs. 4.5 billion for the period saw a 46.7 percent YoY reduction from Rs. 8.4 billion in the same period of 2024, attributable to greater focus of the Bank on improving credit quality. This took the Bank’s total impairment coverage ratio, excluding such one-off items of a special nature, to 8.7 percent (end 2024: 9.6 percent); which compared well relative to the industry average at the said period end. 

Operating expenses totaled Rs. 9.2 billion - which, whilst increasing by 14.8 percent over H1- 2024 - stemmed primarily from staff related routine increments and realignments to the industry, and higher investments in IT infrastructure and those of a direct business development nature. 

Return on average equity was 10.6 percent down from 12.2 percent in 2024 whilst Annualised Earnings per share was Rs. 19.65 down from Rs. 21.25 for 2024. 

Respective ratios at the Group level were 10.8 percent (2024: 12.5 percent) and Rs. 21.23 (2024: Rs. 23.05), respectively. The Bank’s Pre-tax return on average assets was 2.0 percent (2024: 3.1 percent). 

Net asset value per share was Rs. 186.81 (2024: Rs. 186.91) and compared with a closing share price of Rs. 120.25, which posted a 6.2 percent appreciation since end 2024. Group Net asset value per share was Rs. 199.37 (2024: Rs. 199.13).

The Bank’s total deposits amounted to Rs. 696.1 billion at June 30, 2025 (end 2024: Rs. 631.7 billion, 10.2 percent growth) whilst net loans expanded to Rs. 557.0 billion (end 2024: Rs. 460.7 billion, 20.9 percent growth). Excluding transactions of a one off and special nature, this represented a normalised absolute net growth of 5.5 percent and 14.9 percent over end 2024, respectively. 

The Bank’s CASA ratio on a normalised basis was 25.0 percent having improved from 22.5 percent at end 2024; ultimately reflecting the Bank’s conscious efforts to improve its low cost funding. The Bank’s Impaired loans (Stage 3) to total loans ratio was 5.1 percent (end 2024: 5.2 percent) which compared well with the industry average. Its Stage 3 provision coverage was 53.4 percent (end 2024: 54.5 percent) which also was close to the industry norm. 

Liquidity levels also remained strong with the Bank’s Liquidity coverage ratios, across both Rupee and All currency, being 330.9 percent and 253.8 percent, respectively at June 30, 2025 (end 2024: 358.1 percent and 308.3 percent) and its Net stable funding ratio being 124.5 percent (end 2024: 152.4 percent) - all of which were well above the minimum regulatory requirements of 100.0 percent. 

The Bank’s solvency levels as measured by CET1/ Tier I and Total CAR were 12.3 percent and 16.6 percent, respectively representing a strong over 5.0 percent buffer over its regulatory minimums from a CET1 perspective and over 4.0 percent buffer from a Total CAR perspective (end 2024: 13.7 percent and 19.1 percent).

Commenting on the results for the first six months, the Bank’s Director/ Chief Executive Officer Kelum Edirisinghe said, “For us, the first six months of this year marks many milestones. Amongst them all, one standout is our continued contribution to the SMEs in the country and one which is best reflected in our loan book crossing the Rs. 100.0 billion mark and accounting for close to 20 percent of our total loans - a feat we are very proud of! NDB’s recent recognition as Euromoney’s Best Digital Bank for SMEs for the year 2025 provides further testimony to the success of this focused effort to serve this crucial and determinative segment of our economy.

“Looking ahead, our focus is clear. We will continue to leverage on our deep rooted knowledge and experience in understanding customer behavior better, use our digital capabilities to create greater ease of access and use the diverse skills and capabilities of our staff at both a front end and back to adopt and adjust to an ever evolving business landscape in order to ultimately better enable us create sustained shareholder value over the longer haul. 

Conscious of also the challenges which may lie ahead, we remain confident of the Bank’s continuing trajectory of growth in its core banking operations and realizing its vision for the future sooner rather than later”.