NDB records Rs.1.4bn first half profit

National Development Bank PLC (NDB) saw its group net profit for the first half ended June 30 (1H15) falling 29 percent yoy to Rs.1.44 billion amid a slow down in the banking group’s top line.

However, at the bank level NDB saw its net profit increasing 7 percent yoy to Rs.2 billion.

Total operating income of the Bank grew 5 percent compared to 1H14, to reach Rs.6.2 billion.

Net Interest Income (NII) declined by a marginal 3 percent due to the relatively low credit growth environment that prevailed in the country. 

Net fee and commission income which is a primary contributor towards core-banking operations increased by 12 percent compared to the prior period. 
The Bank’s Other Operating Income also increased by Rs.602 million, to reach Rs.1 billion for the period, which included equity income of Rs.965 million as compared with Rs.431 million for the prior period. 

At the Group level, total operating income declined marginally by 3 percent to reach Rs.6.1 billion.

The decrease was primarily due to the reduction in net gains from NDB Group’s total financial investments portfolio. 

However, NDB Group’s Net Fee and Commission Income (NFCI) recorded a significant growth of 28 percent over the prior period due to the increased performance of the fee based group companies.

The Bank’s Impairment charges for loans and other losses for the first six months of 2015 was Rs.198 million, compared to Rs.222 million of 2014, a reduction of Rs.24 million which was primarily due to improved quality of the Bank’s loan portfolio. 

Total operating expenses grew by 16 percent, an increase of Rs.411 million compared to the prior period. The main cost driver during the period under review was 9 new branches which were added to the Bank’s branch network. 

At a Group level, the operating expenses of Rs.3.28 billion grew by 18 percent over the first half of 2014.

The Bank’s Balance Sheet recorded moderate growth during the first six months of the year, with total assets growing at 3 percent.  

Loans and receivables to customers grew at the same pace of 3 percent, reflecting the slow credit growth experienced across the banking industry. 

The Non-performing loan ratio (NPL) of the Bank for the six months ended 30 June 2015 was 2.64 percent, still one of the best NPL ratios in the industry and compares with an industry average of 4.5 percent (as at April 2015).

Customer deposits recorded a 12 percent growth compared to the year ended 31 December 2014.

The Bank issued and placed listed rated unsecured subordinated redeemable debentures of Rs.10 billion with a maturity period of 5 years during the second quarter of 2015.

The Bank continues to remain well capitalized with a 10.12 percent Tier I capital adequacy ratio and a 14.69 percent total capital adequacy ratio, well above the minimum statutory requirement. 

Earnings per Share (EPS) for the period under review was Rs.17.54. The share price of the Bank closed at Rs.260.30 on 30 June 2015, with a resultant PE ratio of 14.84 (times). 

NDB Chief Executive Officer Rajendra Theagarajah, commenting on the six months’ performance reiterated that the Bank is resolute in its strategic growth momentum.